Many people are expecting smaller tax refunds this year due to the recent overhaul of federal tax laws. In some cases, filers who are used to receiving a refund are discovering they owe money this year. For those of you who are going to receive a sizable refund this year, we encourage you to stick around and read our blog.
If you do manage to receive a tax refund without difficulty this year, then you could use the extra funds to bolster your finances. Depending on your situation, even a few hundred dollars can go a long way. If you want to be more financially responsible this year, then use your tax refund wisely.
How You Could Spend Your Tax Refund This Year
- Add to an emergency fund. Hopefully, you already have an emergency fund. If you do not, this year is a perfect time to start one. Without adequate savings, any surprise expenses can put you in major debt for months or years to come. Use your refund to make a significant deposit to your savings.
- Pay off debts. Your tax refund is also helpful for reducing or getting rid of high-interest debts. Consider paying off payday loans, title loans, private student loans, credit card debt, or car loans.
- Buy something you need. You could use your tax refund to purchase items that you need, either professionally or personally. For instance, if you have not bought a new phone in five years, now might be the time to upgrade. If you have items that could break down in the next couple of months, you could use your tax refund to purchase a replacement ahead of time.
- Start an itemized savings account. Make a budget and split your refund into specific savings goals. This could help you avoid accruing additional debts in the future. Many banks have online features that you can use to establish savings goals.
- Make property improvements. Take a look around your house, car and any other property you own. See if you can use your refund to make improvements. If improvements are needed, then you could make repairs while you still have the extra funds available.
Our Kansas City Bankruptcy Attorneys Can Answer Your Tax Debt Questions
The attorneys at The Sader Law Firm can help you determine if it is possible to discharge your income tax debts in bankruptcy. Contact us through our website or call us at (816)281-6349 for a free consultation and more information on tax debt and bankruptcy options.