Get the Most Out of Tax Season
Tax season is beginning. For most of us, that can mean seemingly endless forms, paystubs, and other paperwork to work through as you file. It can also mean that you have a refund check coming your way. Get the most out of tax season with these tips on filing your taxes and investing your refund.
Get Your Taxes Prepared for Free
Get tax season started off right by saving money while filing your taxes. Before paying a person or service to file your taxes for you, consider a few other options. If you make less than $54,000 a year, you can have 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.
You can also take on the challenge by filing your taxes yourself, with the help of TurboTax. If you're a Gulf Winds member, you can save $15 on your return while qualifying for a $25,000 drawing.
Pay Down Your Debt
Use your refund for some much needed debt relief. You probably don’t want to see your entire refund go straight to your credit card bill, but you don’t have to take the all-or-nothing approach. Consider earmarking 20% of your return toward paying down high-interest debt you may be carrying. You can adjust this number as you see fit, but you’ll be doing yourself a favor by paying off a large chunk at once. You’ll save a ton on interest and you’ll be finished with this debt a lot sooner than you’d planned.
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.
Did you use your refund to pay off some bad debt and set a little aside in savings? While you don’t want to blow your refund on impulse buys, it’s OK to treat yourself with a piece of your return. Get that pair of designer shoes you’ve been drooling over all season or to treat yourself to a night out at that expensive new restaurant in town.
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 in part by Justin Chu, Program Associate, Taxpayer Opportunity Network