Big Tax Refunds Could Be Big Mistake for Taxpayers

Manchester, MO (9/10/2015) – The average tax refund this year was more than $2,500. Some taxpayers see this as a windfall. In reality, many of those same taxpayers could be getting that money all year long, if they changed their withholding allowance. Liberty Tax Service will share these and other tax-saving strategies during its IRS-approved tuition-free* Tax School, which begins (9/28/2015).

The tax refund in many ways is a tax-free loan to the federal government. Taxpayers give more than they’re required to, and the federal government returns that overpayment in the form of a refund during tax season. By increasing their allowance on the W-4 form, taxpayers ask their employers to withhold less federal income tax each pay period. That means more money goes into the paycheck and, ultimately, the employees’ pockets.

Those same taxpayers might want to take a look at their 401K contribution and see if they can make a larger contribution. Just $100 a month over 15 years would cost $18,000, but the plan would be worth almost $35,000, assuming an annual rate of return of 8 percent. At the same time, the taxpayer would realize tax savings because an increased 401K contribution would decrease taxable income.

“Knowledge is power,” said (Doris Chebib), owner of Liberty Tax Service in (Manchester, MO). “We want to share that knowledge with local residents and help them reduce their tax bill.”

Liberty’s Tax School is perfect for aspiring tax preparers, do-it-yourself filers, and those who want a better understanding of income taxes. School is in session two days a week for 8 weeks; day and evening classes available. Students learn skills that are valuable and marketable, and get practice in preparing income tax returns on paper and online.

To register for Liberty Tax School, call 636.527.4446 or visit www.libertytax.com.

* Small fee for books and supplies.