5 Ways to Save a Bundle at Tax Time
By John Nevitt
As Ben Franklin once said, “In this world nothing is certain but death and taxes.” I can’t offer any help with the first one, but I can give you a little advice regarding the second.
Tip #1 – Go to a VITA Site
Did you know that if your household earns less than $49,000 a year, you can have your taxes done free of charge through an effort supported by Metro United Way? Through a program developed by the IRS called VITA (Volunteer Income Tax Assistance), thousands of volunteers across the country are preparing federal and state tax returns for families, free of charge, to ensure they are getting all of the tax credits for which they are eligible, resulting in larger tax refunds. On average, you can save between $115 and $205, according to a national survey by the National Society of Accountants.
Metro United Way is making these same services available across our seven county region. VITA sites use certified volunteers who have completed an IRS approved training program to make sure you are getting the largest refund possible. To find a site near you, call Metro United Way 2-1-1, or use one of the following links to connect with one of our community partners:
- Louisville Asset Building Coalition (Jefferson County)
- Southern Indiana Asset Building Coalition (Clark, Floyd, and Harrison Counties)
- HJW Career and Financial Literacy Institute
Tip #2 – File electronically and have your refund directly deposited into your bank account.
If you electronically file your return and choose the direct deposit option, you will typically have your refund in two weeks or less. We all know that time is money, and waiting for a paper check from Uncle Sam can take four to six weeks. VITA sites will electronically file your taxes for free. If you don’t have a bank account, our tax sites can connect you to a local bank or credit union with good products for you.
Tip #3 – Avoid using Refund Anticipation Loans.
Refund anticipation loans, or RALs, offered by many larger commercial tax preparers, auto dealerships, check cashing services, or payday lenders, strip valuable resources from your tax return, costing an average of $100 to get your loan a few days faster.
Tip #4 – Make sure you are claiming all of the tax credits for which you are eligible.
Here are a few to keep in mind: The Earned Income Tax Credit (EITC) supports families with incomes up to $48,279 and can result in a refund as high as $5,657, with an average refund of $2,000. Approximately $26 million in EITC goes unclaimed each year in Louisville. Another important credit is the child tax credit which earns you $1,000 per child. Other credits include the childcare tax credit, the savers credit, education credits, and homebuyer’s credits. Consult the IRS website for more information on the variety of tax credits available.
Tip #5 – Use electronic filing software.
The Louisville Asset Building Coalition (LABC), co-founded and supported by Metro United Way, offers free tax preparation software on its website for families of modest means. Also, certain LABC VITA sites, and other sites in our regional area, provide assisted self file services, including space, volunteers, and computers loaded with free filing software; they’re there to help if you get stuck. If you are not eligible to use the free software because you’re income is too high, you can purchase software for a modest fee that will scan your return to ensure you are claiming all eligible deductions and credits to maximize your refund.