Tax refunds are coming. Many people will receive a federal tax refund this year, some will receive a tax windfall. Why is that? Well…it is because you paid too much on your taxes throughout the year. You plain just gave Uncle Sam too much money. The money you are getting back is YOURS; it didn’t come from some lottery system or some government program. If you are getting back thousands of dollars in a refund, that is because you are letting the government borrow and use your money interest free all year long. Would you put your money in a savings account at 0% interest? Of course not. So what should you do? If you are getting back too much and you expect to make around the same amount this year, then change your W-4 withholding amount. This will enable you to have more take home pay each month and a minimal tax refund after filing your taxes.
That’s all fine for NEXT year, but what about THIS year when you’ve got a huge refund coming?
1) Get your Emergency Fund in place with at least $1000
2) Start paying off your smallest debts (or get current with current debt)
3) Give some away! Charities, Non-Profits