The Uncle Sam Savings Plan
Are you among the 75 percent of federal income tax filers who'll get a refund this year? If so, the government is making it easier to deposit the money straight into a savings account where you won't be tempted to spend it. According to a story on MSNBC, the refund can even be split and deposited into multiple accounts - some in an emergency fund, some in an IRA, for example. Just attach IRS Form 8888 to your tax return. To download the form, go to the IRS web site and search for "form 8888."
Matt's View
If you plan to make a 2006 contribution to an IRA with your refund, just be sure to file your taxes well ahead of the filing deadline.
One other point: the average refund is over $2,000. Why wait a full year before adding that money to your savings account? There's no law that says you have to overpay on your taxes. If you're getting a sizeable refund this year, work with your benefits department to reduce how much is withheld from your paycheck. You can figure out how much you should be having withheld here .
Managing Money by The Book
- "To keep me from becoming conceited because of these surpassingly great revelations, there was given me a thorn in my flesh, a messenger of Satan, to torment me. Three times I pleaded with the Lord to take it away from me. But he said to me, 'My grace is sufficient for you, for my power is made perfect in weakness.'" - 2 Corinthians 12:7-9
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