How To Save Protect Your Tax Refund

[CATCHMEIFYOUCAN]

www.bkblog.com

[niteflytes]

Here's what I did to save my tax refund and I didn't do anything ahead of time, it's completely legal and doesn't violate any BK "rules". I did this after I paid my lawyer and turned in all the paperwork, but it was before the actual filing date, however I don't think that would matter.

I went to the IRS website and I used their withholding calculator to determine if I was having too much in taxes withheld from my paycheck, which would result in a large refund. The calculator is at http://www.irs.gov/individuals/artic...=96196,00.html

I found out I that at my current withholdings I was going to end up overpaying my taxes and getting a large refund so I changed my withholding to what the calculator recommended. Since I did this around September or October it turned out that I was changing my 2006 withholdings so that I was having NO taxes taken out of my paycheck. My employer balked at this at first but I reminded them that I it's my choice if I want no taxes deducted. They ran it through payroll and it was approved (as I fully expected). For the rest of 2006 I got a little bit of my "refund" each payday in my paycheck.

When I went in for the final review of my BK paperwork I told my paralegal what I'd done since it was clear from my paychecks that my net income had increased. I wasn't worried though. There's no law that says if you're filing BK you can't change your withholdings but BK lawyers and trustee's aren't going to tell you this. Most people just don't realize that you can change your withholding any time you want to. Employers are required to make the changes within a specific time frame - I can't recall what it is, but I think it's by the next pay period after the W4 was turned in. And you can turn in a new W4 as often as you need to. I'm going to turn in a new one next week since I need to have taxes withheld for 2007 so I don't owe the IRS next April.


Now is a good time to check your withholdings. It's early enough in the year that it will be easier on you if you need to have more taken out to avoid paying taxes next year, or if you're considering BK you can adjust your withholdings now to minimize your refund.

[AMISLANDER]

I wish my lawyer would have mentioned this...but in my case, it probably worked out so that I could use all the refund $ that my trustee allowed me back to go to pay to keep the 4runner.

It will need a new starter soon. But at least it's mine!

[Gracia]

Saving is difficult, even for those with the best intentions. But one method that's effective is to put your savings on autopilot. Millions of workers, for example, have a portion of their pay whisked into a 401(k) account. Now, the IRS is offering a similar option for folks who can't resist the temptation to spend their refunds.

For the first time, taxpayers may arrange to have their refunds deposited in up to three accounts, including an individual retirement account. The IRS has offered direct deposit for years, but it was limited to one account. Most taxpayers had their refunds deposited into checking. "When you put money into a checking account," says U.S. Treasurer Anna Escobedo Cabral, "sometimes, it disappears very quickly." Cabral, who has tried to promote financial literacy, hopes the initiative will encourage more Americans to save their refunds. Taxpayers may choose to have their refunds deposited not only into IRAs but also into health savings accounts and education savings accounts.

[lrprn]

Saving is difficult, even for those with the best intentions. But one method that's effective is to put your savings on autopilot. Millions of workers, for example, have a portion of their pay whisked into a 401(k) account. Now, the IRS is offering a similar option for folks who can't resist the temptation to spend their refunds.

Gracia, in the future when you copy something straight from the web and paste it here like your post above, please provide the link to the original source - in this case, USA Today's Money at http://www.usatoday.com/money/perfi/...deposits_N.htm . Thanks so much!

[SinkingFast]

Niteflites gave some good advice if you have not yet filed BK.

If you have filed BK and you're going to try to reduce your potential refund,............ Do not claim more than 10 Exemptions or ask for $0 to be taken out for Federal Income tax. If you do either, that will trigger an IRS investigation of your case at the same time the Federal BK Court is looking at you too.

You definitely don't want 2 branches of the Federal Gov't looking at you at the same time.