Can the IRS Help You Fund Your Christmas Budget?
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Dear Chuck,
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I'm worried about how to cover the costs of Christmas. I know I should have been saving through the year, and I have some money set aside but do you have some suggestions on how to get some resources together to have more money available over the holidays?
A Concerned Mother
Dear Concerned Mom,
You're not the only one thinking through how to make the best of the holidays. In fact, more than 90 percent of Americans will celebrate Christmas or another holiday this season, and many of us feel pressure to appropriately provide gifts for those we love.
According to a recent Gallup poll, people are planning to spend an average of $830 this year on Christmas gifts. In an ideal world, that would mean that most of us would have set aside $75 a month to be ready to go at the end of November when a lot of sales begin.
It's important to start your shopping list with a clear plan and budget that you develop, as retailers will work hard to convince you to do more than you initially were comfortable purchasing. Retailers make about 20 percent of their annual profits at this time of year, so be careful to buy purposefully and avoid the glitter and pressures of the season!
You've probably already thought through the logistics of finding the best prices with research, and considered whether you might make something or go simpler for some of the people on your list. Handmade gifts are less costly, often more meaningful and a very good way to save money. And you probably already know that going into debt for gifts isn't the best way to celebrate a humble birth in a manger in Bethlehem, the greatest gift of all.
But I wonder if you've considered whether Uncle Sam has your Christmas spending money already budgeted for you.
Did you know that you could file your taxes usually within the second week of January making it possible to get your tax return very quickly? CNN reports that the average tax refund is $3,120 — more than enough to cover most people's Christmas plans.
Leaving that money with Uncle Sam until after April means that the government is getting an interest free loan from you, which makes no sense in this economy in which wages are down for almost everyone.
The fastest way to get your money is to file on-line. For the most part, if you can shop on-line, you can file on-line. It's faster, safer, & secure. There are about 15 companies approved by the IRS to provide on-line filing services. A simple 1040 EZ form can be filed on line for free if your AGI — Annual Gross Income in 2014 was $60,000 or less. Check out sites like 1040.com, Turbotax.com, H&R Block, even IRS.gov/freefile. (Full disclosure: we have an alliance with 1040.com because they are company that shares our values.)
Sure that means that during the busyness of the holidays, you'll need to get your taxes organized, but you can go into the New Year with money in your pocket and a huge To-Do Item off your list. If you expect an income tax refund, it can help you avoid debt, reduce the stress you are feeling and celebrate with joy.
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