Rapid tax refund?

Is Uncle Sam Using Your Money?

by Damon Carr

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Tax time is upon us. This is the time where Uncle Sam mandates that we reconcile taxes that were collected from us thus far by way of payroll withholdings and estimated payments and what's rightfully due to the IRS. Individuals have until April 15th to get their tax returns prepared, and if applicable, their balance due paid or suffer the consequences of penalties, interest and/or the wrath of the IRS.

After having individual tax returns prepared, millions of people have learned that throughout the preceding year, they paid more into the tax system than what they owed. Many people are eagerly anticipating the largest lump sum check they'll receive the entire year. This check is the result of a tax refund. If you'll expecting a large tax refund this year, I'm sure you can't wait to get your W2s from your employer so that you can file your returns and get access to your refund. After running up balances on your credit cards and/or spending more than what was budgeted for during holidays, a refund of any kind would be appreciated by all.

Tax time can be considered the day of reckoning. This is a time when you come face to face with the amount of money you earned throughout the year then suddenly gasp, wondering what, where, why, when and how did I spend this money. Millions of people lack a financial game plan.

Would you lend a blood relative a zero interest loan requiring no payments until next year? In an effort to have access to your money sooner than your blood relative can return your money, would you allow a local loan shark to charge you 20-200 percent annual interest? Lastly, would you cash the check you received from the local loan shark at a check cashing company who's going to charge additional money so that you can finally have access to the money that is rightfully yours to begin with? When spoken in these terms, I'm sure that most of us if not all would answer no to all the above questions. This is exactly what millions of people do each and every year.

In the past, I would ridicule tax preparation companies who aligned themselves with third party organizations that offer various high cost products and services. After taking a closer look at their business model, I came to the realization that if they did not offer these products and services, most of their clients would take their business elsewhere. People want their money and they want it now.

Considering the fact that 70% of households live paycheck to paycheck, you can understand why people need to have access to their money as soon as possible. When you factor in the fact that the average American saves less than two cents for every dollar earned, you began to understand that money received during tax refund time represents the only form of savings the typical American does on a consistent basis. Because of this reality, I've always been hesitant to suggest a way that millions of people who are in need of extra money can access their hard earned money each and every paycheck versus once a year during tax season. For if they follow the advice, I fear that the extra money in their paycheck will be absorbed, spent, and unaccounted for. This time there will be no tax refund to serve as a bailout.

We can continue this "little man can't get ahead" mentality of managing our money or we can become more responsible and begin to make our money work just as hard for us as we work for it. I encourage you to stop lending interest free money to the IRS only to receive a negative return on your money once you factor in bank and check cashing fees to have access to money next year you can use today. In the meantime, use this year's refund to establish a financial game plan that will allow you to get your spending under control and develop and fund much needed saving goals such as saving for emergencies, furniture, car, house, school etc. The IRS welcomes this advice. They prefer you come close to breaking even on your tax return for it's an administrative nightmare to process millions of tax refund checks each and every year.

Here's how you access your money today versus next year:

Form W4 – Withholding Allowance Certificate ­ This form instructs your employer on how much to withhold from taxable wages. Remember that exemptions and withholding are not the same. You may be entitled additional withholdings if you qualify for various deductions and/or credits.

Form W5 – Earned Income Credit Advance Payment Certificate ­ Taxpayers who are allowed to claim the earned income credit and have at least one qualifying child can receive up to 60% of the maximum credit throughout the year versus tax time. Receiving your money throughout the year and managing it wisely is the true definition of a "Rapid Refund."

Damon is the owner of ACE Financial. Damon has a solution for your financial problems and a plan to help you reach your financial goals ­ Regardless of current financial status! He can be reached at 412-856-1183 or email at dcarr@acedebteliminator.com

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