Faith-Based Finances

Ideas for Your Tax Refund

A tax refund is always nice.  Last year, more than 133 million taxpayers got refunds, and this year the IRS expects an average return of $2,423.

If you are getting impatient wondering where your money is, the IRS has made it easy to track refunds.  You must wait at least one week if you filed electronically, or 28 days if you mailed it.  To find your refund, visit the IRS Web site at www.irs.gov, or call them 1.800.829.1954.  You must have your social security number, your filing status, and the refund amount.

But was it really a good idea to let Uncle Sam have your money all year before you got it back?  You may want to contact your employer about increasing your exemptions so less is deducted from your paycheck for both federal and state taxes.  That way, YOU can use your money all year – to pay bills and even save some – rather than lending it to the government.

“It’s really important to get a handle on your personal cash flow and take control of your finances,” says Suzanne Boas, president of Consumer Credit Counseling Service, a nonprofit agency providing free budget, credit and housing counseling since 1964.  “Consider using any refund to pay off your credit cards or to build a savings or money market account.”

Here are some suggestions from the certified counselors at CCCS on using that refund wisely:

Give Yourself Some Credit: Pay down your debt!  Send as much as you can – as soon as you can – to credit card companies.  Waiting until the due date may increase your interest charges and paying just the minimum will keep you in a cycle of debt.

Build an Emergency Savings Fund: Fuel your savings or money market account with your tax refund.  Car repairs, health emergencies or life events are difficult to plan for – so be prepared.

Go Fifty-Fifty: If you just can’t bring yourself to save all of your tax refund, tuck away half.  You’ll feel less guilty about spending the cash if you’ve saved some.

Consider the Kids: If you have kids and haven’t started a fund for their college education, now’s the time to start!  Learn about the great tax-advantaged 529 savings plans at www.savingforcollege.com

Down the Road: Think retirement!  That average return of $2,117 is more than half the maximum yearly contribution of $000 to a Roth IRA ($4500 if age 50 and over).

Be Charitable: Now that you have a little extra, help those who need a lot.  Donate a portion of your refund to a charitable organization that is close to your heart.  (And remember to save your receipt for next year’s taxes!)

Treat Yourself: Do something fun but not too expensive.  Then save or invest the remaining cash.

About CCCS of Atlanta:
Consumer Credit Counseling Service of Atlanta is a nonprofit, community service agency dedicated to empowering people to achieve a lifetime of economic freedom.  CCCS Atlanta provides free, confidential budget counseling, community and personal money management education, debt management programs, and comprehensive housing counseling.  Contact CCCS Atlanta by phone at 1(888)771-4673 or visit the website.

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