The holidays are over, and I’ll bet you’re aching for that tax return right about now.
Maybe you dipped into your savings account during your time off from work this holiday season. Or perhaps you (accidentally) maxed out a credit card shopping for gifts… Or yourself, oops!
That’s fine. It’s totally fine to use your tax return to replenish your savings account or to pay off some high-interest debt. But whatever you do, DON’T BLOW IT.
Seriously- The absolute worst thing you can do with a tax refund is spend it on unnecessary items. For some families, it’s just an unexpected paycheck. “Didn’t budget for this extra cash, might as well blow it,” is a horrible way to look at it. You actually earned this money. Be productive with it! Here’s a list of productive things you can do with your tax refund.
- Pay off some debt. The mortgage, your car loan. Even a credit card you’ve been trying to pay off since college. This is your chance to get ahead. Take it.
- Save it. Use an 8888 form when filing your taxes to split your refund before you even have a chance to blow it. Put as much as you can into a savings account, and don’t feel bad if you keep a little for yourself.
- Invest in something big. Maybe you’re trying to buy a house, or a new car. A tax refund makes a good contribution to a down payment. You’re that much closer to your goal!
- Educate someone. This could add to your kid’s college fund. Or maybe you want to further your own education. Take this opportunity to pay for it in cash.
For more advice on how to put your tax refund, check out this guest post by America Saves. It has tons of useful tax information.
Don’t get me wrong, I’m all for a little reward every now and then. After all, you did just stress out about dinner plans and Christmas gifts for every family member, friend and coworker you care about. So treat yourself, in moderation.
A Starbucks drink? Sure. Shopping spree at Nordstrom? Not so much.
Were you hoping for better tax advice? Don’t worry, I’m getting there.
For some families, this tax return isn’t just an “extra paycheck.” Some count on it to make ends meet. They hope for a couple hundred bucks to make rent or pay back the debt they acquired over the holiday season. Here are a few tips* for getting the most out of your tax refund.
- Don’t forget about school! Did you go to college this year? Or did one of your dependents go? You may be able to deduct up to $4,000 for tuition-related expenses. You can also deduct up to $2,500 in interest paid on a student loan.
- If you had a costly year in medical expenses, you may be able to write those expenses off as well. Don’t ignore it! It can’t hurt to find out.
- Don’t forget to include any charitable donations you made. Obviously you’ll have to provide proof, but these are tax-deductible as well.
- Lastly, for my sandwich generations, if you’re taking care of mom and dad now, you can include them as dependents.
Visit Mashable’s website for more Tax Write-Offs you can use to your advantage.
*Fort Worth Community Credit Union does not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.