Make Your Tax Refund Work for You
Every year, the middle of April marks the end of the federal tax return filing season. For most of us, that can mean seemingly endless forms, paystubs, and other paperwork to work through as they file.
However, tax time can also mean a check is coming your way. If you’re anticipating a refund this year, you should begin thinking now about how your refund can go toward saving for the future. Here are three easy ways and have your tax refund work for you.
Put Your Refund Into a Savings Account
If you’re claiming a refund-boosting tax credit such as the Earned Income Credit (EIC) and the Child Tax Credit, your tax refund may be the largest sum of money you will see all year. It can be tempting to spend that money on things you want, but contributing to your savings in some way should be the top priority. By opening or adding to a savings account, you can set aside money that is easily accessible for emergencies that may come up over the next year.
Put Your refund Into a Savings Bond
Typically when making long-term investments, you do so via investment “vehicles” like stocks and bonds. While stocks are tied to the stock market, just as their name says, bonds are a safer way to allow your money to grow without risk of losing money. Typically they are issued with a 30-year term that pays a certain amount of interest each year on their balance.
Get Your Taxes Prepared for Free
Don’t wait to save until after your taxes are filed. Save money on filing by assessing your options before committing to pay any person or service to file your taxes for you. If you make less than $54,000 a year, you can your taxes prepared at no-cost by IRS-certified volunteers in your local community via the Volunteer Income Tax Assistance (VITA) program. If you qualify, you can find a local VITA site using this tool; at these VITA sites, you can get the help of a local tax professional for no charge.
There are many more ways you can put your tax refund to work, but these are great ways to get started. With a little planning, you can maximize your return now for the years ahead.
Resource provided by America Saves Week
Written by Justin Chu, Program Associate, Taxpayer Opportunity Network