SOURCE: Neighborworks America

NeighborWorks America

January 28, 2015 16:23 ET

Four Tips to Start Tax Season Off Right

WASHINGTON, DC--(Marketwired - January 28, 2015) - It's easy to think that good tax advice costs a lot and that getting a refund immediately is better than waiting a few days for the check to arrive in the mail. However, according to NeighborWorks America, these are both "financial traps," and heeding four tips can make tax season a lot more rewarding for many.

1. Avoid paying for tax preparation when you don't need to. Free tax preparation services are available!

Many NeighborWorks organizations around the country offer the free Volunteer Income Tax Assistance (VITA) program. VITA offers quality, community-based services at no charge to help qualifying filers obtain the maximum tax credits allowable, along with quick access to their full refunds. To find a VITA site near you, visit http://www.irs.gov/Individuals/Free-Tax-Return-Preparation-for-You-by-Volunteers.

2. Don't fall into the 'refund-anticipation' loan trap

Many tax preparers offer a refund-anticipation loan if you want your refund right away. The tax preparer gives you your refund within a day or two of filing your taxes, so you don't have to wait for the IRS to follow through. Be aware, however, that such preparers charge an additional fee for an anticipation loan. There often are other "administrative" fees on top of that.

3. Opt for withholding more, rather than getting more back

Receiving a refund means you overpaid in taxes during the previous year. While considered to be a forced form of savings, you'll actually benefit more if you pay the right amount of taxes upfront, thus putting more money at your disposal with each paycheck, than if you receive an end-of-year refund. NeighborWorks organizations and other free resources for financial planning can help develop the best tax-withholding strategy.

4. Start a financial plan

As NeighborWorks America's first America at Home survey found, 53 million adults (22 percent) only have enough savings to tide them over for a month, and nearly a third (29 percent, or 70 million) don't have any savings that would allow them to respond to an unanticipated crisis - much less work toward a desired goal. Financial counseling helps individuals establish savings goals and stick to those goals so that they can improve their credit scores. Many NeighborWorks organizations offer financial coaching. Visit neighborworks.org to find an organization near you.

About NeighborWorks America
For more than 35 years, NeighborWorks America has created opportunities for people to improve their lives and strengthen their communities by providing access to homeownership and to safe and affordable rental housing. In the last five years, NeighborWorks organizations have generated more than $22.5 billion in reinvestment in these communities. NeighborWorks America is the nation's leading trainer of community development and affordable housing professionals.

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