Free VA Tax Filing

Carolyn Spohrer, VA CASH Campaign and Virginia Community Action Partnership, introduced Governor McDonnell at the Virginia Free File Public Briefing on February 7, 2012. Governor Bob McDonnell said Tuesday that the VA Free File program gives more than 2 million low- and moderate- income Virginia taxpayers the opportunity to prepare and electronically file their 2011 federal and state income tax returns for free this tax season. The governor spoke at a public briefing on VA Free File at the Library of Virginia on Tuesday, Feb. 7. He was joined by Speaker of the House William J. Howell and Senator Richard Saslaw.

VA Free File is a public-private partnership between the Virginia Department of Taxation and the Free File Alliance, a coalition of commercial tax-software companies. The 2010 General Assembly approved the partnership. VA Free File is modeled after the highly successful Internal Revenue Service Free File program used by millions of taxpayers since 2003 to e-file their federal income tax returns for free. Free File lets taxpayers who meet certain eligibility criteria, including an income threshold, e-file their state and federal tax returns for free online using commercial tax-preparation software. Free File supports the Virginia 760 form for residents, the 760PY form for part-year residents , and the 763 form for non-residents.

"Last year only a fraction of those who qualified for free tax-return preparation and e-filing of their federal and state returns took advantage of Virginia's new Free File program," said Governor McDonnell. "This year I urge all Virginia taxpayers who earn $57,000 or less in adjusted gross income last year to go to the Tax Department's website to see if they qualify to use VA Free File."

To learn more about VA Free File click here.
For more on Governor McDonnell's Press Release on VA Free File click here.

Courtesy of VA CASH  Campaign, Virginia Community Action Partnership, Governor McDonnell's Press Release

Understanding Taxes: The Quick and Simple Way to Understand Your Taxes

Access all the great educational content found in the Understanding Taxes program on the Internet! This online version includes detailed lesson plans, interactive activities, simulations, and more! This site includes both a Teacher Site and a Student Site. Click here

Courtesy of the IRS

Tax Information for Students, Seniors & Retirees

For tips on Seniors & Retirees preparing taxes and other important tips click on this link.

For Students who want more tax information click on this link.

Courtesy of the IRS

Triple Crown Tax Savings for Retirement Contributions

One of the greatest missed opportunities of all time is the tax benefits offered through retirement savings.  A lot of working Americans don’t realize how many layers of benefits there are to retirement plan participation.  Just take a look at all the great things that retirement savings can do for you:

1.        Reduces your taxable income.  Participation in a traditional 401K, 403B or TSP reduces your taxable income as your contribution comes out of pre-tax dollars.  Thus your federal and state tax withholdings are reduced and your taxable income at tax time is less.  More money in your pocket right away because those tax savings go right into your pocket.

2.       Matching benefits.  Many employers match employee contributions.  That is free money that the employee adds to their retirement nest egg.  Free money that otherwise stays in the bosses pocket.    Now who do you think can use it more?

3.       Saver’s Credit.  If you make contributions to an IRA or an employer retirement plan (including Roth contributions) and your income is less than $27,750 ($41,625 head of household or $55,500 married filing joint) you may be eligible for the savers credit which can be as much at 50% of your contributions! 

With so many ways to save on your taxes while you are building your nest egg for the future, there is no reason not to ramp up your savings.  For more great savings ideas and some more reasons to contribute to that retirement fund check out our retirement section at  http://virginiasaves.blogspot.com/ 

Tax Refund Split to the rescue!

Did it happen again?  Did you say you were going to put some of your tax refund into savings last year, only to realize you spent the whole thing before you had a chance to move the money? If this describes you, then let the option to split the tax refund come to your rescue!

Savings will improve financial security. Life is unpredictable and brings about unexpected events that cause stress. The stress level of an unexpected event such as a major car repair is difficult to handle. The financial burden of the bill from the repair shop is just part of the problem. The need for new transportation arrangements until the vehicle is repaired is not only inconvenient, but can be very expensive. Money in savings helps buffer the impact on the financial situation.

Virginia Saves encourages people to become savers. The tax refund can jumpstart savings and prepare for life’s bumps in the road. Virginia Saves’ partners offer free or low cost, low balance accounts especially designed for our savers. Most people can become savers regardless of income. Start saving a portion of income received every month. Make savings automatic! Automatic transfers are great saving options at most local banking institutions. Start small. Transfer $5 to $25 to a savings account monthly. Think Big. The amount that is saved is not as important as just starting the habit of saving.

According to the IRS, the average refund for electronically filed tax returns in 2009 was approximately $2900. The IRS allows the tax refund to be split among two or three accounts. For example a $1500 tax refund can deposit $500 into a checking account to pay past bills or purchase current needs and deposit $1000 into a savings account for emergency savings. Tax preparers use Form 8888, Direct Deposit of Refund to More Than One Account, to allocate the tax refund to accounts as requested. This form tells the IRS how much money to electronically deposit in each account. It is important to check the box on the 1040 that indicates the splitting of the tax refund and double check the account and routing numbers before the form is submitted. See Frequently Asked Questions about splitting tax refunds.

Do something different this year; save part of your tax refund. You will be glad you did!

Other article about this subject:

Splitting Federal Income Tax Refunds

Where’s My Refund? 

What to do with your tax refund

Pay Past, Present and Future with Your Refund

Dreaming about the tax refund

Is there a Tax Credit for you?

Check out http://www.taxcreditsforworkingfamilies.org/ for information about tax credits for working families. Click Virginia on the State Resource Map.

Tax credits directly reduce taxes owed, dollar for dollar. Tax deductions reduce taxable income and will indirectly reduce taxes owed, but not dollar for dollar. In short, a $100 tax credit is worth more than a $100 tax deduction.

Some tax credits are refundable while others are non-refundable tax credits. Refundable tax credits are refunded to the tax payer even if credit exceeds the tax liability. A good example is the Earned Income Tax Credit (EITC).  Click here for details about income qualifications.

The 2011 EITC Awareness Day is February 28! Stop by the Norfolk Workforce Redevelopment Center at 201 E. Little Creek Rd in Norfolk on Friday, February 28^th 9AM- 2PM.

This is the kickoff event for free tax prep.  There will be a team of tax preparers ready to prepare taxes.  Many other vendors will be available to give information including VEC, an IRS tax advocate, and some of the Virginia Saves financial partners. Also, Virginia Saves will have a table at the event. A change wrapper machine will be at the table and can be used to turn change into bank deposits!