SALT LAKE CITY — With tax season in full swing, many Americans should be in high spirits. It's time for tax refunds. Never mind that most financial experts and institutions believe you're doing it wrong if you get a refund, a majority of Americans when polled would prefer to get a refund, even if it means giving the government an interest-free loan. This is demonstrated by the average refund during the past five years rounding out to $2,879. This year's returns promise to be similar.
So what will Americans do with their refunds? A TurboTax survey found that 29 percent of those getting a refund planned to add it to their savings or retirement accounts. Another 24 percent would pay down debt; 16 percent said they needed the money to pay for living expenses. And my guess is the remaining 31 percent will splurge on a trip to Florida to escape Utah's air quality and these ridiculously cold winter days.
But to receive a refund, there's the task beforehand that most of us dread completing our taxes. It's even worse when you have to pay for help. According to the National Society of Accountants who recently surveyed its members, the average cost to prepare an itemized Form 1040 with a Schedule A (for itemized deductions) and a state tax return is $246. The average rate for a return without itemized deductions is $143.
Yet there is great news for taxpayers who qualify for free tax assistance, which according to the IRS, is more than 70 percent of Americans who have an AGI of $57,000 or less.
For those who would like to file online, the IRS has coordinated a program called Free File. It's a partnership with 19 private software companies that have agreed to make tax preparation free or low-cost. To access the program you must start at the IRS Free File page found on their website, irs.gov. From there you can e-file your federal return for free. A number of the tax software programs also support free state tax returns. More than 33 million people have used the program since it was first offered in 2003.
If you prefer personal assistance when preparing your tax return, the Volunteer Income Tax Assistance (VITA) program offers free tax help to people who make $51,000 or less. The program operates through the help of IRS-certified volunteers who provide basic income tax return preparation. VITA sites are located at community and neighborhood centers, libraries, schools, shopping malls and other locations. In Utah this year, there are 73 free tax preparation sites with nearly 750 volunteers.
The VITA sites also specifically focus on the Earned Income Tax Credit (EITC), a refundable tax credit, meaning it can reduce taxes to zero and receive a refund of any remaining credit. In addition, the maximum amount of income Americans can earn and still get the credit has increased for 2012 tax returns.
For those interested in finding a VITA tax site to make an appointment to get their taxes completed, call 211, the Information and Referral Service Hotline.
And after you submit your taxes and receive your refund, make sure to make it count. As for me and my refund, I'll see some of you down in Florida.