Money Management · Uncategorized

4 Steps To Make The Most Of Your Tax Refund This Year

BrokeBlackMama

It’s that time again: tax time!

Moms, you have this large chunk of cash coming in a few months (or few weeks – I see you, early filers) and it’s important you do not ball out of control without a plan or anything to show for it come Spring – okay?

Here are 4 steps to making the most of your tax refund this year.

Step 1: Jot down everything you want/need funds for in the current year

Examples include:

  • Emergency/goal savings
  • Kid college funds/savings

    • Tip: Open a US Treasury Savings Bond for your children. I opened a EE Savings Bond (click the link to see why) account for my 6-year-old – Rhea – when she was 2 (wish I had done it earlier) and deposit a couple of hundred in it every year to gain interest, be safe from spending, and for her to do whatever with when she is 18. I repeated this for our baby – Savannah and my husband did it for our oldest, Adri.

  • Birthdays: parties, presents
  • Christmas
  • Bill catch-up
  • Loan repayments
  • Daycare/after school program payments
  • Advance rent/mortgage payments
  • Home revamps/repairs
  • Vacation/trips
  • Kid summer camps

Step 2: Estimate each event/thing cost – create a high number and a more reasonable number

For example, you want to use your refund to pay for a family vacation this summer. Your high number might be $2500 but you could save on transportation by driving and get discounted rates at your resort, so your more reasonable number can be $2000. This way you can be more ready and willing to make adjustments if your refund isn’t as large as you think or larger than you imagined.

Step 3: Estimate how much your refund will be – create 3 numbers: high, likely, and low

Tip: use apps like TaxCaster to get an estimate on your refund; use sites like TurboTax to file your taxes
Another Tip: call 800-304-3107 to see if your refund will be offset (taken away) by the IRS for things like back child support, student loans, and other outstanding payments to the Federal government – the element of surprise is not fun during tax time

If after doing the steps above you find that your desired expenses can be covered with your refund and it will not be offset by the IRS, by all means, stop here and…you’re welcome.

However, if you’ve reached for the stars on what you want to spend your refund on – your expenses are greater than your refund – then it’s time to make some cuts.

Step 4: Prioritize your expenses

  1. Decide what are your most important of your expenses from your list
  2. See where you can lower those expenses (for example, cut down on money you want to spend for leisure things like vacation or instead of buying all new furniture for your living room – see if small additives can make the difference you’re looking for while saving you money – more on that later.)
  3. Determine if there are future expenses you can save up for – entirely or partially – to lower what you’re using from your refund
4-steps-to-making-the-most-of-your-income-tax-refund

Thanks for reading. I hope these 4 steps help you plan your refund, use it wisely, and help make your year brighter.

I’ll be back with more ‘tips and plan-aheads’ next time. Bye!

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