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Seven tips to save around April 15
Save money
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By Eric Tyson
Special to the Courier

HOBOKEN, N.J. — Question: What three words do people least want to hear in the middle of a recession? (Besides “You’re laid off,” that is.) Answer: “It’s tax time!” Yes, by now you should have your W-2 in hand, and you’re already dreading having to file. Tax season isn’t all bad news. Even if you’re not expecting a fat refund check, the looming presence of April 15 can inspire you to make changes that will keep more of your cash out of the clutches of the IRS — now and in the future.
Here’s some tips that will allow you to cross “taxes” off of your list of worries and may help you put money back in your pocket:
Revisit your withholdings. Do you dread April 15 because it means you have to dole out a huge check to pay your tax bill? Or maybe you have to skimp and save throughout the year but then get a big tax refund when you turn in your taxes? Either way, you need to adjust your withholdings. You can do so by filling out a Form W-4, one of the many forms you filled out on your first day at your job and probably haven’t thought about since, and turning it into your employer. You’ll see an adjustment in how much you’re bringing home on your paycheck.
If you or your spouse has recently lost a job, changing your withholdings might put some extra money in your pocket, especially if one of you has been withholding too much. Just be sure that your withholding matches your tax liability. Adjusting your withholding just so you get more out of a paycheck isn’t a good idea.
Be a fast filer. Too many of us get our W-2s just after the new year begins and hold on to them until we finally file a week or two into April. You can file now and have refund money in your bank account within a few weeks. Thanks to e-filing, there is absolutely no reason to wait until April 15. If you e-file either by using a Web site or DIY taxes computer software, you can set up your refund so that it is direct deposited into your bank account.
Usually, your refund money will go into your account in about 10 days. The flipside, of course, is that if you know you are going to have to write a check to the IRS, you might as well wait as long as possible to file.
Keep an eye on the new stimulus package. The new stimulus package passed Congress this week and there are going to be tax credits coming our way, though all the details are not out yet.
Just be sure that you spend it wisely. It’s easy to look at these kinds of stimulus checks as free money and spend the cash on something we want rather than need. But in the down economy, you’re better off rolling the money into your IRA or using it to make a safe, long-term investment.
If you’re thinking about buying your first home, now might be a good time to take the plunge. Home ownership has always yielded tax benefits for smart, sensible buyers. And the stimulus package has tax credits for first-time homeowners or possibly others. Talk to real estate and or legal advisors about what the new plan will do.
While I would never recommend that anyone make such a big decision for tax benefits only, I do feel that if you’re financially and emotionally ready to buy, now is the time. Property prices and mortgage rates are low and of course your interest on mortgage payments is tax deductible.
It can’t be said too often: Fund your retirement. When you funnel your savings dollars into retirement accounts, such as a 401(k), 403(b), SEP-IRA, Keogh or IRA, you can earn substantial upfront tax breaks on your contributions. Tyson says you might even consider investing your tax refund check there. And please don’t let worries about the stock market’s ups and downs dissuade you from making smart, long-term investments now.
Investigate itemizing. If you’ve looked at itemizing your taxes as too much trouble in the past, now is the year to start. You might be surprised what a difference spending a little more time on your tax return can make. The IRS gives you two methods of determining your total deductions and you get to pick the method that leads to the largest total deductions — and the lowest tax bill. But sometimes the choice isn’t so clear, so be prepared to do some figuring. Taking the standard deduction usually makes sense if you have a pretty simple financial life.
The other method of determining your allowable deductions is to itemize them on your tax return. The painstaking procedure is definitely more of a hassle, but if you can tally up more than the standard deduction amounts, itemizing saves you money.
Invest in your health: HSAs help you keep thousands of dollars away from Uncle Sam every year. Health Savings Accounts allow you to put away money for a rainy day and reduce your taxes. If you are unfamiliar with how HSAs work, here are the basics: An HSA, which is paired with a high-deductible health plan, empowers you to save on a tax-free basis toward current or future unreimbursed medical expenses. If you get sick and haven’t met your deductible, the funds in your HSA can be used to pay it off. Once your deductible is paid, your insurance plan will kick in and cover any subsequent medical costs under your policy, but your HSA can still be used to pay for your co-pays and any non-covered healthcare expenses.
In this down economy, no one wants to send any more than necessary to Uncle Sam. But it’s not just a matter of the dollars you’ll save; it’s psychological. Doing what you can during tax season to hold on to more of your money will help you manage some of the anxiety you’re feeling as you try to make ends meet in 2009.

Tyson, who holds an MBA writes financial advice books, including “Taxes 2009 For Dummies” with coauthors Margaret Atkins Munro and David J. Silverman. For more information, go to
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