Riverwoods, IL (Vocus) February 21, 2007
Upgrading your home entertainment center does offer immediate gratification, but using your income tax refund to pad your retirement nest egg may be a better long-term option. To help those who may be looking for a middle ground, CCH CompleteTax (http://www.CompleteTax.com), an online tax preparation and e-filing program for the do-it-yourself tax filer, enables taxpayers to split their refund and have it deposited in up to three accounts, including taxpayers' IRAs for funding 2006 individual retirement accounts. CompleteTax also offers several features, including an updated Tax Projector, to allow taxpayers to start tax planning for this year.
"There's a natural inclination to look at your income tax refund as easy money, ripe for spending. But you owe it to yourself to look at your overall financial situation. You'll likely find you are far better off using at least some of your tax refund for retirement savings and paying down any debt you may have," said Debra Gray, CCH CompleteTax product manager.
Helping to reduce the spending temptation, CompleteTax allows taxpayers to make the decision to save while they're preparing their tax return, meaning all or a part of the income tax refund can be directly deposited, for example, into your IRA account, rather than having a check mailed to you or the refund deposited into your checking account. In order to direct deposit a tax refund - whether to one, two or three accounts - all taxpayers need to do is indicate the name of each institution, the routing number, account number and amount they would like deposited into each account.
"The option to deposit their refund into multiple accounts is important to taxpayers who want to responsibly manage what could be a very large dollar amount. CompleteTax makes this easy to do," said Gray.
While taxpayers have until April 17 to file their 2006 income tax return , given the weekend and Patriot's Day holiday, they should not wait until the last minute to fund their 2006 IRA. Gray notes, although e-filing with direct deposit generally means taxpayers can get their refund in as little as two weeks, there's no guarantee by the IRS that each and every return will be processed that quickly. Additionally, taxpayers planning to direct deposit their refund into an IRA account should designate whether the contribution is for tax year 2006 or 2007 and ensure their financial institution's specific deadline for direct deposit of 2006 IRA contributions.
Improving Your Tax Planning for 2007
Taxpayers interested in what they should be doing to ensure that their 2007 tax refund is not unnecessarily large also can tap free tools available on the CCH CompleteTax site. This includes a W-4 Withholdings Calculator that can help individuals with large tax refunds for 2006, determine how much less they should consider having withheld from their paychecks this year. This means the taxpayer has more income coming in throughout the year that can be invested in interest-bearing accounts rather than a large tax refund at the end of the year.
Also, taxpayers filing with CCH CompleteTax now have access to the CCH CompleteTax Tax Projector which can provide a snapshot of what their tax obligation will be for 2007, allowing for additional tax planning opportunities before year end.
"One of the biggest oversights individuals make is not considering their prior year taxes until they start their tax return the following spring. Taking a look at your tax situation during the current year means that you can make adjustments to help reduce your tax obligation before you owe or pay more taxes," said Gray.
Other free financial calculators on the CCH CompleteTax site include calculators for home financing, paying off debt, calculating return on investment, retirement and comparing IRAs, and auto leasing.
About CCH CompleteTax
CCH CompleteTax, an online tax preparation and e-filing service for the do-it-yourself taxpayer, continues to set the standard when it comes to making online tax prep and e-filing easy, efficient and affordable. CompleteTax offers comprehensive support to help taxpayers through each step and allows them to prepare a federal income tax return for just $25.95 and a state income tax return for $12.95, including free e-filing. Taxpayers can try before they buy, as CompleteTax does not require payment until a return is ready to be e-filed or printed and mailed.
About CCH, a Wolters Kluwer business
CCH , a Wolters Kluwer business is a leading provider of tax and accounting law information, software and services. It has served tax, accounting and business professionals and their clients since 1913. Among its market-leading products are The ProSystem fx® Office, CCH® Tax Research NetWork™, Accounting Research Manager® and the U.S. Master Tax Guide®. CCH is based in Riverwoods, Ill.
Wolters Kluwer is a leading global information services and publishing company. Its shares are quoted on the Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices.
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