Tony Just Received His Checking Account Statement from His Bank

Tony just received his checking account statement from his bank. He has a NOW account with free checking that pays 0.75% APR on the balance and requires a $500 minimum balance. His statement shows that he currently has a balance of $3,950. In looking at his statement he notices that his car payment check for $400 is still outstanding, and that his recently received payroll deposit of $3,600 had not posted at the time the statement was created. His normal living expenses average $1,500 per month including his car payment. Other than his car loan, he rarely writes any checks as he prefers to use his debit card and ATM card for day-to-day living expenses. He pays his credit card balance in full every month. Other than his checking account he does not own any investments. He has always dreamed of owning a house, and would like to buy one within the next five years. He has access to a 401K pension plan at work where his employer will match contributions up to 6% of his salary. He currently contributes 2% of his salary to this plan.
-Tony has not received an Income Tax refund in 4 years. Is there anything you could recommend to him?

A) No, without dependents there is not much he can do now.
B) He should increase his 401K contributions to 6% of his salary.
C) He should itemize his deductions
D) He should change his W-2 form and claim more deductions
E) All but A are good recommendations

Correct Answer:

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