Do you expect a tax refund this year?
You're in good company, while millions of Americans are in the same boat. In early March, the IRS has reported a return of the average tax of just over $ 3,000, an increase of three percent compared to the average return for the same period last year.
Although the repayment can feel like a bargain, remember that it is actually your money due to overpayment of taxes. Some people compare to give Uncle Sam an interest free loan.
If you lack the self-discipline to save during the year, then get a tax refund can be a good way to force yourself to save.
is assuming that your refund will actually savings, many do not.
If you want to put money to work in other ways, then you may want to adjust your payroll. This way you will have more cash flow during the year and a lower return in the future
If you already have a tax refund coming your way, here's a look smart ways to use :.
repay debt
If you have high debt interest, like credit card bills, put at least part of your refund towards your debt.
the money you put into the main means less money you will have to pay later interest costs, which can add up quickly. However, because mortgage loans are a secured loan, the interest rates are generally lower than other types of debt.
Pay off high-interest debt, like credit cards should be a higher priority than paying a mortgage.
Register
If your car broke down and needed repairs, do you have the money to pay for it? What about unexpected medical bills or a plane ticket last minute to attend the funeral of a parent?
If you answered no, then you might want to store your tax refund into a rainy day fund. Nowadays, savings accounts do not earn much interest, but you still need liquid funds available for emergencies.
Depending on your situation and the speed with which you might find a new job if you were laid off, experts recommend saving the subsistence value of three to six months in case.
fund your retirement accounts
already have a rainy day fund? Consider putting your refund in retirement savings and let your money grow over long periods of time. If you are already contributing to a pension plan sponsored by the employer as a 401 (k), then you may consider opening an IRA (individual retirement account).
The maximum amount you can contribute to a traditional or Roth IRA is $ 5,000 per year ($ 6.500 if you are 50 years or older).
traditional IRA contributions may be tax deductible.
invest
If you 're already saving for retirement and not have a high-interest debt, then you might consider investing your refund. Most experts advise not invest money that you will not need to at least five years and diversify rather than focusing on single stocks.
Of course, the investment does not necessarily mean buying financial instruments. If you're hoping to advance your career, you could invest in yourself by paying for a certificate program or professional development courses.
If your home needs repairs or have examined some improvements, you could invest that money in your home. Consider this article on the renovations that will add value to your home.
spend
In addition to paying the debt, savings or investments, you may feel the urge to spend your refund, too. As long as you do it intentionally and spend the money on something that brings you happiness, go ahead.
Take this weekend trip you and your honey have dreamed, you can buy these boots you've been eyeing online, or treat yourself to that your colleague cooking class raved about.
Ramit Sethi, author of "I teach you to be rich," recommends you deal with a small part of the money found. Hopefully it means you will not feel deprived and the wind blowing up 'the whole thing
Tell us How do you plan to use the tax refund this year
Photo credit:.! peddhapati photopin via cc
0 Komentar