Tax season is here and with it, the arduous task of preparing to file our taxes. But it doesn’t have to be that way. With a little planning and ingenuity, tax preparation can be a breeze. Don’t believe us? Check out today’s blog post, where we offer 4 tax tips for easy filing.
Whether you are an individual, filing married, or a small business owner (SBO), one thing is for certain – filing taxes can be an arduous and often confusing task that you may find yourself ill-equipped to handle. Even if you have a tax professional help you, you might discover you have some unanswered questions regarding your tax filing. One of those questions that might spring to mind is: who can I claim as a dependent. We answer that question inside!
Now that the tax season is behind us and your tax return dollars are firmly in hand (or should be soon at any rate), its time to give a long, hard thought on what the best way to utilize this “new found” money is. In this quick blog post, we are going to discuss some smart ways you can use your tax refund.
How to Spend Your Tax Refund
If you were lucky enough to not owe money and actually received a tax refund from the IRS, the temptation is probably there to go out and blow it on something fun, like a vacation, new cell phone, jewelry, or maybe as a down payment on a new car. Sure, why not – you worked hard for your money right?
While the above might be fun and go a long way towards satisfying the almighty instant gratification we all yearn for, wouldn’t it be better to actually turn the tables on our money and make it work hard for us? Instant gratification and new toys are nice, but they are short lived – hence the “instant” part! Imagine a world where you actually had one less car payment every month, where creditors did not call you repeatedly during dinner, or where you actually had a little bit of money stowed away for that inevitable rainy day.
That’s what this article is all about. So, without further ado, here are some smart ways you can spend your tax refund dollars this year.
Pay Down Debt with Your Tax Refund
One of the best ways you can spend your tax refund is by putting it towards credit card debt. Not only will this save you stress and help your credit score, it also is a great way to actually save money. This is because the additional money you spend will go towards the principal balance, reducing your overall debt.
If you have multiple cards, you can take one of two approaches. You can either put it towards the credit card with the highest financing rate or you can use it to pay off the card with the smallest amount owed. If you pay off the card with the smallest amount owed, consider taking the payments from that card that you would normally pay every month and using it to paying the new smallest card. Rinse and repeat and you will have that debt paid off in no time!
Go to School
This is one option most people never really consider, but in the long run it can pay off in huge dividends. We aren’t suggesting going back to college for your masters degree – though that certainly isn’t a bad thing. However, spending your tax refund on education – whether it be a course or to gaain certification – is a solid investment not only in yourself, but in your financial future as well. Adding new skills can lead to greater opportunities, which, in turn, can lead to more pay. Win, win!
Pad Your Retirement
Odds are, you never noticed the money that was being taken out of your pay for taxes each paycheck. Because of that, it is always a good idea to think of your tax refund dollars as found money. A great tip on how to spend your tax dollars wisely is to use that “found money” to pad your retirement fund.
In this quick blog post, we are going to seek to answer the age old question: what are tax deductions. We will be covering this from both a personal and a small business owner (SBO) perspective, with an emphasis on small business tax deductions. We will also discuss the difference between business and capital expenses, and tips on how to avoid a tax audit by the IRS.