Put Your Tax Refund to Work
Are you expecting a tax refund this year? Though the refund is actually your money that you overpaid in taxes, some people think of it as a windfall and go out and splurge on big ticket items or a vacation, etc. There are actually a lot of ways that you can put that “windfall” refund to good use.
* Pay it towards your debt. Do you have high interest credit cards or other loans? You could use all or part of your refund to pay off or reduce your credit cards or loans. What about your mortgage? Put your “windfall” towards the principle of your debts when possible and it will help reduce the interest you will pay in the future.
* Your retirement account. Are you a little behind in saving for your retirement? Consider putting that refund in your traditional or Roth IRA account. You can contribute up to $5,500 each year and if you are over 50 years old you can contribute an extra $1,000 to your retirement accounts.
* A new home. If you’re thinking of buying a home in the future, you could add your refund to your down payment fund.
* Investing in yourself. Is it time to brush up on your job skills for that promotion you want? Use your refund to take those classes you’ve been wanting to take.
* Charity donation. If you are feeling generous, giving your refund to a charity helps others and gives you a deduction for your next tax return.
* Vacation. Maybe you are caught up on your debts, you could always splurge on a great vacation.
Of course there are always scammers ready and willing to take your refund. They are using a new tactic now to grab your refund before you even have a chance to decide what you want to do with it. Scammers file a fraudulent tax return on behalf of their chosen victims. When your refund arrives, they call your home and impersonate an IRS agent telling you the refund was sent to you in error and demand you return it to them.
FYI: Real IRS agents will never call you on the phone and demand an immediate payment for any reason.