#1 - Save Some of the Money!
- Use a portion to create or enhance your emergency fund.
- Set aside part of the money for college funds if you have children or grandchildren.
- Consider other investments that are appropriate for your personal situation and your stage in life.
- Maybe this is the seed money you need to start a small business or real estate venture?
- Don't forget to fund your retirement plan.
#2 - Pay Down Debt
- Pay particular attention to credit cards and other non-deductible debt.
- One strategy is to tackle the smallest balances first and then progress to larger debt balances.
- Another prudent suggestion involves first eliminating debt with the highest interest rates and then focusing your attention on balances with lower interest rates.
#3 - Have Fun with It!
- This refund is a reminder of the income you generated from last year's efforts.
- Take your family to dinner to celebrate your accomplishments from the previous year.
- Treat your family to a movie or other fun event.
- Consider using a portion to fund a family vacation.
#4 - Invest in Home Improvements
- Identify improvements that add value to your home.
- Consider energy-efficient improvements that will enhance your home and provide future savings.
#5 - Contribute a Portion to Charity
- Identify and contribute to a few charities that are meaningful to you.
- Use a portion of the funds to improve our community.
- Remember that charitable contributions may be deductible for the current year.
#5.5 - Adjust your Payroll Withholdings
- Large annual refunds are not prudent savings tool.
- You should consider submitting a new Form W-4 to your employer's human resource department or reducing your quarterly tax estimates to ensure that future refunds are not as large.
- Consult a CPA or tax adviser for periodic tax planning.
Please remember these are general tips and advice. If you have questions about your specific situation...please contact a financial advisor.
For access to the Pocket Tax Guide click on the link below:
Christopher J. Harper, CPA, MBA
Hungerford, Aldrin, Nichols & Carter, P.C.
2910 Lucerne Drive SE
Grand Rapids, MI 49546
Phone: (616) 726-6054