Tuesday, April 3, 2007

Splitting your tax refund, a chance to save!

This year, you can split your tax refund to go into several different accounts. If you use direct deposit of your refund (and why wouldn't you?) you can split your refund up to three ways including checking, savings and retirement accounts. It's perfect, now you don't even have to be tempted to spend your refund, it can go directly into your retirement account. Cool.

Use IRS Form 8888 on irs.gov to designate to which accounts--and in what amounts--you want your refund disbursed. Visit splitrefunds.net for more information. The IRS has these suggestions for us:

1) File early to avoid delays. If you want part of your refund to go toward an individual retirement account (IRA) and your return arrives after April 17, the direct deposit will work, but the contribution will be for 2007 instead of for 2006.

2) Don't exceed the IRA limit. The 2006 IRA contribution limit is $4,000. If you exceed that, you could get penalized.

3) Use correct account or routing numbers. If the number you enter on the tax form is wrong and doesn't pass the IRS' validation check, the IRS will mail a check for the entire refund instead of splitting it. If the number you enter is wrong and turns out to be another person's account number, the direct deposit will go into that person's account. (Yikes! Don't let that happen to you! Hawthorne's routing number is: 271979193. Check and double check your account numbers and routing numbers!)

Good luck and happy saving!


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