Tax Tips
If you are one of the millions of Americans who still owe
Uncle Sam a lot of money or if you are receiving a refund
and want to know how to use it wisely, help is available at
Consumer Credit Counseling Service of Western PA (CCCS).
CCCS is a local nonprofit, community service organization
that provides confidential counseling, guidance, debt
management and education programs to financially troubled
consumers. CCCS offers private and confidential budget and
debt counseling at one of our community-based branches or in
the privacy of your home with our convenient telephone
counseling. CCCS offers the following tips for consumers who
are receiving a refund:
Open an emergency savings account. Many
people live from pay-check to pay-check and have to borrow
money if a crisis occurs. Having an emergency fund allows
you to use cash for unplanned expenses rather than a high
interest credit card.
Pay off high-interest loans first. If you
plan to pay off debt with your refund, pay off debts that
have the highest interest rates first. Typically, credit
cards have a higher rate of interest than mortgage or car
loans.
Get professional debt reduction advice. A
tax refund may not be big enough to solve a serious debt
problem. If you can only make the minimum payments on your
credit cards, you are likely to be still paying on the same
debt 10 to 20 years from now! If you are incurring late
and/or over-limit fees, your debt may be increasing by as
much as $70 per month per card! If these situations sound
familiar, you may need professional help or advice.
CCCS offers these money management tips for consumers who
may have taxes due at filing: Decide how to pay. Research
your options. Some options include a bank loan, an IRS
installment plan and an IRS approved credit card. You'll pay
interest on a bank loan, a processing fee and interest on an
IRS installment plan and convenience fees plus interest to
American Express, Discover and MasterCard ' the approved IRS
credit
card companies.
Determine how you will pay off the loan.
You can make a bad situation worse by falling behind on your
tax loan payments. Make sure that you can live with the
terms before you sign. Otherwise, you could incur penalties
and late fees.
Change federal withholding. Many people
with large tax bills simply didn't withhold enough from
their paychecks during the year. Still others sold stock and
failed to budget for the capital gains tax. Correct both
scenarios and avoid similar problems next year.
See a credit counseling professional for help. Treat your
tax shortfall as a wake up call to get your finances in
order. The credit counselors at CCCS of W PA would be happy
to review your finances.
If you need additional information on budgeting or debt
management call CCCS at 1-888-511-2227 or visit us at our
website ' www.cccspa.org.