April is Tax Filing Month: Create Your Future Using Your Refund

As winter winds down and spring emerges, so does tax season! As the filing deadline of April 15 approaches, there’s often some stress around completing even the simplest IRS form and calculating potential tax refunds. But the stress and effort can pay off, because refunds can help pay the most basic necessities, such as the winter heating bill or a car repair. They also offer an opportunity to think about how to use refunds to build a safety net for future expenses and opportunities. Here are some tips for handling tax season and getting the most out of a refund.

• Seek out and ask for expert volunteer assistance to prepare your taxes. Many tribal colleges, community centers, veterans’ organizations, and senior centers offer these services to tribal members. Ask about Volunteer Income Tax Assistance (VITA) services and other free, expert tax preparation services. VITA also helps low- to moderate- income people file for the Earned Income Tax Credit (EITC). The EITC is a refundable tax credit for low-income workers that can amount to more than $6,500. Services like VITA ensure that you not only get your taxes prepared by a skilled, trained volunteer but also—because the service is free—get 100 percent of your return back. Private tax preparation firms charge fees for their services or require you to pay a percentage of your refund.
• Once you receive your refund, open a savings account. Consider using 3 percent or 5 percent of your income tax refund to seed your savings account. Once you have established an account, challenge yourself to save more, perhaps a set amount in 2017. Make your goal realistic, whether it is $20, or $200, or $2,000 the first year. The point is to set a goal, start small, and build out. Consider adding $20/month to start. These amounts may seem small, but your savings will grow over time. The important thing to remember is that you are creating a financial cushion for you and your family.
• Visit your tribal college, community center, or adult basic education center and ask about financial education programs. Often called financial literacy programs, these are useful courses that can equip you with the skills to manage money, understand debt, avoid unscrupulous lenders, establish a good credit score, and develop a household budget. If financial education is not available locally but you have access to the Internet, consider one of the many free on-line financial education courses. For example, Oweesta, the National Congress of American Indians, the Native American Indian Housing Council, and First Nations Development Institute all offer free, online, culturally tailored financial education programs. Other excellent resources include the Jump$tart Coalition for Personal Financial Literacy’s online clearing house of free online financial education resources, the FDIC Money Smart program, and consumer information from the Consumer Financial Protection Bureau.
• Look into establishing an Individual Development Account (IDA). IDAs are designed to promote opportunities for saving and they are an ideal way for AIAN people to increase their assets while learning to manage their finances. For tribal members, IDAs are matched savings accounts. That is, every dollar you save earns an additional and immediate contribution from the sponsor of the IDA program. Some IDAs offer dollar-for-dollar matching contributions, and others may offer more incentives. Many IDA programs also offer financial literacy courses, programs to support first-time home buyer readiness, financial planning services, and coaching programs.
• Locate a Native Community Development Finance Institution (Native CDFI) near you. Native CDFIs offer financial services designed to improve the financial well-being of AIAN families and communities. Many offer assistance with tax preparation and personal financial education, including home buyer readiness. They also help AIAN people repair their credit, develop savings accounts, and obtain grants and bridge financing for small businesses and homeownership, among other financial services. A few Native CDFIs include First Nations CDFI, Lakota Funds, and the Native American Community Development Corporation. Visit the Native CDFI Network’s website or the Minneapolis Fed’s Find a CDFI link to locate one in your area.
• Visit an Indian-owned credit union or bank. Like Native CDFIs, Indian-owned credit unions and banks provide financial advice and offer financial products and services, including VITA tax preparation services, that meet the needs of AIAN families and communities. They also help community members build credit and capital. Many offer free online financial education courses, and some offer gift cards or matched savings accounts once a customer has completed the curriculum.

April is National Financial Literacy Month. So along with filing your taxes by April 15, take some time to understand how to make your money work more for you. Dream big with even the smallest savings account—and start this year.