3 Creative Ways to use your tax refund
You’ve filed your tax return and now it’s time to celebrate!
When I work with my clients as their financial planner, I always work with their CPA (Certified Public Accountant) to help them implement tax strategies to more or less break even with the IRS every year on their tax return.
Meaning, the goal is to have the right amount of taxes paid out during the year based on your financial situation, i.e. tax bracket, income, deductions, etc. This ensures that you don’t end up owing a huge amount in taxes when you file your tax return or end up getting a huge amount back as a tax refund. Otherwise, if you get a huge refund back, it’s like loaning your money to the government at a 0% interest rate and then getting it back and getting excited about that. If you are able to keep your money during the year, then you can have your money work for you by gaining interest in your bank account.
However, in case you do end up getting a tax refund this year, instead of spending it all on that new handbag you’ve been eyeing or immediately using it to take a weekend get away, use my approach to divide up your money and allocate it in 3 different creative ways.
Whether it’s a tax refund, or maybe even just a lump sum bonus check or inheritance, here are 3 creative ways to allocate that money:
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Until next time,