Senate bill would allow taxpayers to defer refunds for savings

A bipartisan pair of senators have introduced legislation that would allow taxpayers to save part of their refunds for a “rainy day.”

{mosads}Under the bill, offered this week by Sens. Cory Booker (D-N.J.) and Jerry Moran (R-Kan.), taxpayers could defer up to 20 percent of their refunds by opting in to a savings program on their 1040 forms. The money set aside would accumulate interest in accounts held by the Treasury Department and then would transfer into the taxpayers’ accounts through direct deposit after six months.

“Savings are a critical component of financial security and economic mobility, but setting aside enough money each payday can be difficult when dollars are already stretched and existing expenses must be paid,” Moran said in a release. “This bipartisan legislation would allow Americans to utilize a rare moment of financial flexibility that accompanies a tax refund to plan for the future, set aside savings for a rainy day, and invest in their own financial stability.” 

“Through the Refund to Rainy Day Savings Act, we can help New Jerseyans and millions of Americans by allowing a portion of their tax refund to be made available later in the year,” Booker said.

The bill would make use of an existing program to test strategies for tax-time savings matches for low-income people.