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Filing your taxes can be a source of stress and confusion, or a simple matter of paperwork, depending on your knowledge of the process. It can even be profitable, if you’re owed a state or federal refund.

You don’t have to file your taxes until April 15th, but for peace of mind – and a quicker turnaround on those refunds – you may want to file as soon as you’re allowed. So let’s talk free filing help, what a refund really means, and more.

Crunching the numbers

Though the idea of making tax calculations yourself may make your head hurt, think twice before paying someone to file your taxes for you: There is likely a tax office near you that will help you fill out the forms for free, thanks to the IRS’s Volunteer Income Tax Assistance (VITA) program. VITA tax centers offer free tax-preparation assistance to those who make $54,000 or less. They’re located in community and neighborhood centers, libraries, schools, shopping malls, and nonprofits across the country, and the IRS even provides an online tool to locate the VITA tax center near you, as well as a toll-free number: 800-906-9887.

Think twice before paying someone to file your taxes for you: There is likely a tax office near you that will help you fill out the forms for free.

If you like to use the computer to do your taxes yourself, and your adjusted gross income is $66,000 or less, you also have no-cost options for that: Check the IRS website for free tax-prep software.

About that refund

Once you’ve filed your taxes, you may be getting a nice refund. Although spending your refund right away may be appealing, consider saving or investing part of it, or using some of it to pay off debt. The IRS has a “split payment” option for your refund that can help. By filling out IRS Form 8888, the IRS will divide your refund payment among as many as three accounts: You decide how much goes where. And, if you’re thinking long-term, you can also tell the IRS to use part or all of your refund to buy U.S. Series I Savings Bonds for yourself or someone else.

Getting a big refund feels good, but don’t forget that it’s just the government returning your money to you.

Just remember: If you get a big tax refund every year, you might think about adjusting the amount withheld so that less money is taken out of your pay each month. Getting a big refund feels good, but don’t forget that it’s just the government returning your money to you: Consider that you could have been using that money all year long – to pay off debt or even earn interest in a savings account – rather than waiting around to get it back as a tax refund!

Taking credit

Another factor to explore: If you don’t earn much money, you may qualify for something called the Earned Income Tax Credit (EITC). That’s a tax credit from the government that can amount to several thousand dollars. You should take the time to find out whether you qualify, and if claiming the credit will save you money. You can also use the Internal Revenue Service’s EITC Assistant to help determine your eligibility for EITC and estimate the amount of your credit.

Adapted from this article by the Consumer Financial Protection Bureau.

FOR MORE INSIGHT

On tax basics
Your complete guide to the 2018 Tax Changes (The Motley Fool)
Free tax return preparation for qualifying taxpayers (Internal Revenue Service)
Free file: Do your federal taxes for free (Internal Revenue Service)
Earned Income Tax Credit questions and answers (Internal Revenue Service)
Use the Earned Income Tax Credit assistant (Internal Revenue Service)

The content on missionmoney.org provides general information and does not constitute legal, tax, accounting, financial, or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information; do not endorse any third-party companies, products, or services described here; and take no liability for your use of this information.

© Georgia Center for Nonprofits 2019

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