Generous Taxpayers Overestimate Tax Withholdings; CCCS Offers Ideas on Making the Most of Your Tax Refund

HOUSTON, March 17 /PRNewswire/ -- Have you ever thought of yourself as a
small-time lender to the government?  If you receive a tax refund this year,
you are among the 85 million small-time lenders in the United States.  For
many, the idea of getting a tax refund is exciting, however it really means
Uncle Sam received an interest-free loan of their hard-earned dollars from the
preceding calendar year.  The average tax refund is about $1,500, which is a
significant amount of "unexpected" money.
    Consumer Credit Counseling Services (CCCS), a division of Money Management
International (MMI), suggests that taxpayers consider reducing the withholding
on their W-4s if their tax refund exceeds $500.  Calculators at http://www.irs.gov
are available to help taxpayers figure the appropriate amount to withhold.
    "The idea is to increase your take-home pay throughout the calendar year,"
said Kelly Rote, communications manager for MMI.  "Just think, if your tax
refund this year equals $1,000, that means you could have increased your take-
home pay by more than $83 a month without owing anything to the IRS on
April 15."
    However, for the millions of Americans expecting a tax refund this year,
CCCS offers the following tips on how to make the most of it:

     --  Choose tax preparers carefully.  If someone promises you a big refund
         without first reviewing your finances, something is wrong.  Remember
         that you are responsible for any misrepresentations on your 1040,
         regardless of whether or not you made the mistake.
     --  File electronically.  E-file and you will have your refund within
         weeks.  With E-file tax software and a personal computer with a
         modem, you can file electronically from home.  You may also E-file
         with a commercial tax preparer.
     --  Reserve refund anticipation loans only for emergencies.  Is it worth
         $30 to $300 to receive your refund several weeks early?  If it is, be
         sure to compare rates and to read the terms of the loan carefully.
         These loans are typically offered by tax preparation services.
     --  Put your savings in interest-paying accounts.  Fearful that they will
         spend the money, many Americans use their W-4s to stash money.  If
         they were to place this money in an interest-paying certificate of
         deposit, they would still be able to pay their bills and save some
         additional money.

    "Don't forget that your refund is your earned money," said Rote.  "Use
your refund wisely by placing it in an interest-bearing savings account or use
it to pay down credit card debt.  You should also consider placing it in an
Individual Retirement Account (IRA).  Because you work hard for your money,
you should expect your money to work hard for you."

    About Consumer Credit Counseling Services
    Consumer Credit Counseling Services (CCCS), a division of Money Management
International (MMI), is a non-profit, full-service credit-counseling agency,
providing confidential financial guidance, counseling and debt management
assistance to consumers for more than 46 years.  CCCS helps consumers trim
their expenses, develop a spending plan and repay debts.  Counseling is
available by appointment in branch offices and 24/7 by telephone and Internet.
Services are available in English or Spanish.  To learn more, call
800-762-2271 or visit their website at http://www.moneymanagement.org .