2021 is here and that means it is almost tax time!
Every year, millions of Americans get a tax refund and every year millions of Americans spend their tax refund within weeks, maybe even days of getting their check or direct deposit. Whether your refund is $500 or $5000, saving should be a priority.
Keep reading to find out how you can save this tax season.
Utilize Free Tax Preparation
Have you heard about the VITA tax program? The Volunteer Income Tax Assistance program offers free tax help to people who generally make $57,000 or less, persons with disabilities and limited English speaking taxpayers who need assistance in preparing their tax returns.
To find out if you are near a participating VITA location, visit the IRS Website. If you are not near a VITA site, visit MyFreeTaxes.com to find how to prepare your taxes online. You can also call 1.800.829.1040 for assistance.
Plan to save a portion (if not all) of your refund and enter the National SaveYourRefund Contest for a chance to win up to $5,000.
Update Your Home or Vehicle
Updating your home or vehicle during tax season can help you save money in the long run. Many retailers run tax season sales, so finding the best deal on that new dishwasher should be easy. By purchasing newer energy efficient appliances, you could potentially save on your monthly utility bills.
*Super Saver Tip: When shopping, don’t forget to utilize websites like Rakuten or Retail Me Not to get cash back and find coupons. You can also use retailers’ loyalty programs to get additional rebates back.
Now is also the perfect time to do periodic maintenance on your home or vehicle. While you have the extra cash, have your air conditioner annual maintenance done or your termite inspection completed.
Pay Off Debt
Use a portion of your refund to pay off debt. I always suggest finding the smallest balance to pay off first. Then, use that monthly payment to pay an additional amount each month to another debt. Another option is to pay on the highest interest debt first, which will also save you money in paying less interest.
Another option is to save some of your refund for those unexpected expenses or a sudden drop in income. It is recommended to have enough saved to cover three months of your living expenses. Saving a portion of your refund to start this fund will give you a head start on building your financial stability.
It is the first of the year, which means now, is the best time to set aside the funds to pay for those expenses that you know will be coming. I am talking about property tax, insurance, car registration renewals, and annual doctor visits. Every tax season, I set aside a portion of my refund to pay for these items. By having this money set aside, I have peace of mind to know that I can pay those bills when I get them.
Now, I am sure you are thinking, “So, what should I do first?” The first thing I always do is grab a fresh piece of paper (or Excel spreadsheet) and write down (or type) my refund amount. From there, list your needs in priority along with how much each item will cost. If you have any left over, be sure and deposit it to an FDIC insured interest-bearing account.