TIME TO SPRING AHEAD: JUMP START YOUR PERSONAL FINANCES WITH SIMPLE TAX PLANNING
Published In: Business, District of Columbia 
Tuesday, March 17, 2009 1:19 PM
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- Tax Refunds Not a Smart Investment -

WASHINGTON, March 17 /PRNewswire/ -- Personal Statement by Eleanor Blayney, Consumer Advocate for the Certified Financial Planner Board of Standards (CFP Board):

Every spring, Americans spend considerable effort going through their financial records and preparing their tax returns. They want to make sure their figures for the prior year are reported correctly. What they fail to do however, is think strategically and plan for the year to come. By overpaying their taxes and locking up their cash in tax refunds, Americans are withholding nearly $3,000 from their pay checks every year.

According to the National Retail Federation, two-thirds of consumers will get a refund from their 2008 taxes. This year, the average refund check will average $2,900, higher by nearly 9 percent than the year before.

Americans getting money back probably count themselves lucky, but they shouldn't consider it a smart investment. While they have been struggling to make their mortgage payments, or paying late fees and high interest charges on their credit cards, the government has been holding their money at zero percent interest. That same money, unproductively held by the government, could have been used for anything from savings to payments to investments.

After Americans get their refund check, if they don't take the next step and make sure their current withholdings on their W-4 form or estimated payments are adjusted accordingly, they will repeat the same cash-losing strategy in 2009. Indeed, they may lose out on even more, considering their 2009 tax liability will likely be further reduced under the new credits and deductions in the stimulus package.

It may take an hour or two more to do some tax projections in addition to your usual tax return preparation, but it is worth it, especially now when there is not a lot of "free" cash to be found.

A CFP(R) professional can be a real help here, since his or her focus will be on planning as opposed to compliance. He or she will go beyond "safe harbor" tax strategies, which only attempt to eliminate underpayment penalties, and will help you avoid the disruption to your cash flow of significant over- or under-withholding. You can trade feeling lucky next April to feeling wealthier and in better financial control now.

About Eleanor Blayney, CFP(R): Eleanor K. H. Blayney, CFP(R) is a pioneer in the field of professional financial management. Her professional financial advice on topics ranging from how to design large-scale investment strategies for high net worth individuals to helping families develop and abide by their budgets and meet their financial goals. Eleanor is President of Directions LLC, a firm that assists women with money issues, and helps them to build their confidence as competent financial consumers and decision makers. She has been a professional financial planner for more than 20 years.

About CFP Board: The mission of Certified Financial Planner Board of Standards, Inc. is to benefit the public by granting the CFP(R) certification and upholding it as the recognized standard of excellence for personal financial planning. CFP Board currently has more than 58,000 CFP(R) certificants in the United States. For more about CFP Board, visit www.CFP.net.


SOURCE Eleanor Blayney


 
Tuesday, March 17, 2009 1:19 PM

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