What Should I Do with My Tax Refund?

Many people awoke to a surprise in their 2017 tax bills because they did not realize the full ramifications of the changes in policies. Small percentages ended up turning into real dollars. If you had a larger investment tax bill without the corresponding returns this year, then you may want to make sure that your tax advisor and investment advisor are both working together in your best interest. However, if you found yourself having overpaid taxes on the net for last year, and your refund check is coming, then here are some options to consider for your money:

1) Pay off debt: This idea has been very popular recently as many people have run into problems with high interest rates on credit cards or home loans. It is important to keep debts under control, so a tax refund could be used to lessen the burden.

2) Start an emergency fund: If a crisis happens, and you have not planned, it could derail all the other ideas that you have. You may want to consider a rainy day fund just in case.

3) Spend it: This choice can seem the most gratifying immediately, since you can see the results right away. However, once money is spent, it no longer can work for you optimally over a longer term.

4) Save and invest it: This method can be the best way to help you reach many of your financial goals. The power of compound interest is undeniable, and postponing your gratification can have dramatic results in your life.

Did you know? If you are getting a very large refund, then you may seek to adjust your tax withholding rate. You may wish to keep more of your money from being taken from you only to be returned later with virtually no interest.

2018-04-10T07:40:07+00:00 April 10th, 2018|Financial Advice|