Learning from Your Filed 1040

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The tax season is over — to which I exclaim a hearty "Thank God!" You've sent in your return with a check, or are eagerly awaiting your refund.

Now is the time to look back and learn from this year’s 1040 filing so that you can make next year’s process less taxing.

Did you get too big a refund? You should revise your withholding at work so that less is withheld.

While everyone loves a big refund, from a strictly financial standpoint when it comes to your tax return, it really is better to give than to receive.

Getting a refund, especially a large one, means that you made an interest-free loan to the government. If you want to loan money to Uncle Sam, buy Savings Bonds or Treasury Bills.

Interest rates on deposit accounts these days are truly pitiful, and I certainly sympathize with clients who use tax withholding as a kind of “forced savings” or “vacation club.” I also know that if many of my clients got an extra $100 in their paycheck each week it would be gone before the next one arrived. But there are alternatives.

If you belong to a credit union at work, have the additional amount of your pay directly deposited to your account. Credit unions often pay more than banks. Or you can increase your employee contribution to a pension or thrift savings plan. This way the extra $100 never finds its way into your hands.

You can have the additional money directly deposited to a Roth, if you qualify, or traditional IRA account.

Another good idea is to use the increase in your take-home to pay down a credit card balance. With finance charges as high as 20%, this is truly a good return on your investment.

New Jersey tax pro Robert D. Flach has been preparing 1040s for individuals since 1972.

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

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