Getting the Most Out of Your Tax Return
It may still seem early, but time is ticking away. That dreaded deadline is approaching: Tax Day.
This year, your federal taxes are due April 17, 2012.
If you haven’t already, you’ll soon sit at your computer or with a tax professional to file your 2011 tax return with Uncle Sam.
If you’ll receive a tax refund, now is a great time to consider some smart ways to put your refund to work for you:
- Pay-down debt – You’ll hear this time and again. It’s easy to look at your monthly cash flow and feel like you’re doing just fine making minimum payments. So why bother? Paying off your high interest debt more quickly will save you a lot of money in the long run. That’s money you could be using to save for your future or to have some fun. Paying off debts early, can also increase your credit score.
- Add a boost to your emergency savings – Unfortunately, many of us know too well that life has a way of throwing up unexpected obstacles from time-to-time. And those challenges often involve money. Making sure you have enough money saved for an unexpected emergency will save you a whole lot of stress and ensure you don’t find yourself deep in debt later.
- Make an IRA contribution – Although your contributions to an employer-sponsored plan at work come right from your paycheck, you can still enhance your retirement savings with your refund. If you have an IRA, consider throwing some of your refund at your retirement savings. If you don’t have an IRA, they’re relatively easy to establish, and our advisers would be happy to discuss which type of IRA would be most appropriate for you.
- Invest in yourself – Education is becoming more important than ever and with the job market showing signs of life again. Now may be a great time to brush up your skills and enroll in some classes at your local community college or technical school.
- Live a little – Personal finance is one of those topics that seems to spoil the fun, but it’s also important to look at the big picture and enjoy life. Treat yourself to a night out or buy something you’ve wanted for a while. If you’ve been dying for that relaxing vacation, your refund might even allow you to jet off to paradise without a huge bill to greet you when you get home.
Although receiving a nice refund check every year seems like a nice bonus, it really means that you’ve been giving too much of your paycheck to Uncle Sam each pay day. To the government, the extra money is basically an interest-free loan, which should instead be extra money in your pocket. Not sure how you should fill out your W-4? The IRS has an online calculator that will help you figure out exactly how to adjust your withholding.
Take Action
So tell us, how do you plan to use your tax refund this year?
As always, feel free to contact a Smart401k adviser at 877-627-8401 or info@smart401k.com to discuss your situation.
Andrew Thomas
Smart401k Associate Representative
Photo Credit 401k
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Smart401k is a web-based investment advisory service providing unbiased recommendations to help people invest in employer-sponsored retirement plans. Smart401k provides service to nearly 11,000 clients who collectively have more than $2 billion in assets. Plan participants receive personalized, fund-specific investment recommendations and the support of professional investment advisers available to discuss all investment questions. Based in Overland Park, KS, Smart401k is online at www.Smart401k.com.
