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Five Smart Uses for Your Income Tax Refund

11:06 AM, Mar 26, 2013   |    comments
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#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:

Courtesy of:

Christopher J. Harper, CPA, MBA
Senior Manager
Hungerford, Aldrin, Nichols & Carter, P.C.
2910 Lucerne Drive SE
Grand Rapids, MI  49546
Phone:  (616) 726-6054

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