CPAs: Take advantage of tax-filing firsts

COLUMBUS – The Ohio Society of CPAs (OSCPA) recommends that Ohio taxpayers take advantage of tax-filing firsts that will allow Ohioans to invest their 2010 tax returns in brand new ways this year.

The Ohio Department of Taxation now offers direct deposits of Ohio tax refunds into certain investment accounts as well as checking and saving accounts. This year, taxpayers who file an Ohio income tax return electronically can choose to deposit their refund electronically into four different types of pre-existing accounts including checking, savings, and individual retirement accounts (IRAs) or annuities and CollegeAdvantage 529 Savings Accounts administered by the Ohio Tuition Trust Authority.

Taxpayers can deposit the entire refund into one account or divide it among up to three different ones.

The federal government is also offering 600,000 low- and moderate-income taxpayers the option to choose a Prepaid Visa debit card as their refund option.

The U.S. Department of the Treasury (DOT) said there are three advantages to the prepaid Visa debit card option over traditional paper refund checks: faster tax refunds, avoidance of checking fees with free cash withdrawals at ATMs on the Visa network and consumer protections if the card is lost or stolen.

The qualified taxpayers received an invite by mail to participate in the pilot program. DOT’s goal is to streamline the filing process and provide a better option for individuals without bank accounts.

But Ohio CPAs caution those who choose the prepaid debit card option to think before they spend their refund.

“I find it interesting that people always ask, ‘How should I spend it?’” said John Discepoli, CPA, PFS of Discepoli Financial Planning, LLC. “I usually tell them to think about not spending it. Instead, start an emergency fund if you don’t have one or invest it.”

Discepoli said this is especially important for those who have lost their jobs or experienced recent financial hardship and may be living paycheck to paycheck.

All other taxpayers receiving a federal refund can choose to invest the money by directly depositing the refund into a checking, savings or IRA account (or combination) when they file electronically using the Free File option from the IRS or by attaching Form 8888 to traditional paper returns.

For advice on how to invest a refund, or to find a CPA for specific tax needs, visit www.FinancialFitnessOhio.com or call 888.959.1212.