5 Financially Smart Ways to Use Your Tax Return
There is NOTHING like it….you log into your bank account or open the mailbox and it’s here! Finally…your tax return has arrived! There are endless possibilities for things to do with it – vacation, pay debt, college fund, home repair, new car, new computer, bills! And, it’s one of the only times each year that you actually get a chunk of money all at once. You feel excitement, relief and nervousness all at the same time.
One thing that is important to remember about your tax return is that it’s actually your own money being sent back to you. A tax return is the IRS returning money to you because you paid them too much throughout the year. So, when you are thinking about how best to use your return, it is probably helpful to remember that the money is not exactly “extra” and was earned by you and your family. With so many options for things to do with the money, we have included five financially smart ways to use your return:
Smart Ways to Use Your Tax Return
1. Put your tax return directly into your savings account – Since the economic downturn several years ago, more and more Americans are living paycheck to paycheck, so one of the wisest things to do is to use your tax return as an emergency fund in your general savings account.
2. Pay credit card debt – Each year, you pay hundreds of dollars in interest on your credit cards. One great thing to do with some or all of your annual tax return is pay down high interest debt. This allows your return to help you save even more money!
3. Put more toward your retirement – This is another great way to save for your future. Any extra money that you can put toward your retirement account will be multiplied as the years go by.
4. Invest – If you have ample funds in your savings and retirement accounts, investing some or all of your tax refund can be a wise use of the funds. Again, this is another way to save for the future.
5. Save for your children’s college education – Using some of your tax return each year to put into a college fund is an excellent way to save for something coming your way down the road.
While there is nothing wrong with having some fun with a small portion of your tax return (we advise up to 10%), it is wise to really think carefully about how to use the majority of your return. Each year may be different and each family/individual has different needs.
If you are looking for a company that can help you with your tax preparation and help you review your withholdings, call Success Tax Relief today at 1-877-958-6638. You can effectively give yourself a pay raise by allowing your tax return to be paid out to you each month in your paycheck. Our experienced tax professionals can help you with a wide variety of tax issues including withholdings, tax preparation, and audit representation. Success Tax Relief can help you get ahead with your taxes!