UNITED STATES—Are you ready? Yes, tax season officially kicks off January 29, but you can perhaps submit your return earlier via federal e-filing even though the IRS won’t accept them until the 29th of the month. However, this is the time to start gathering up those documents and ensure you have all your paperwork in order so that when you file there are no delays, mistakes or problems. If you itemize it’s a bit more work and you want to ensure you have all those receipts ready to go.
I will say this, having an accountant or stellar tax preparer is a good thing. You really don’t want to mess around or play with the IRS. That is an entity that can be downright scary. If it costs you a bit more money to ensure all is in order, make sure all is in order. I know many people wait until the last minute because they know they owe when it comes to their taxes. That is not smart. At least have your taxes prepared so you know what you owe and you can prepare to save money to pay your taxes when they’re due on April 15.
If you’re getting a refund it tends to be a mixed bag for most Americans. Some file immediately because they want that refund. Others wait a bit because that is just what they do. However, whether you owe or you’re getting a refund you need to prepare in advance and think about how you’re going to pay off the IRS, saving money with each check leading up to the payment you have to make, so you have enough. In addition, for those getting refunds, you have to think what are you going to do with that money?
Is the goal to pay off debt that you accumulated over the holiday season? It would be quite smart as you prevent that interest from stacking up to a point where it feels near impossible to get ahead. Perhaps, your plan to utilize that refund to purchase a new vehicle for your household, save for the kid’s college, save for college, go towards property taxes you owe or perhaps you plan to splurge just a bit. I think it is okay for you to splurge a bit, but don’t utilize your entire refund on that. Why? You might need that money for a rainy day or some unexpected medical expense or emergency that arises that you never expected.
Now, I’m not referring to just your federal taxes, you have state taxes and city taxes. You might owe all three, you might owe two of the three or one of the three. Then again you might be getting a refund from all three of them. You can utilize that federal tax refund to pay off bills and debt, the state and city refund you can perhaps place into savings and purchase yourself and item or two that you have been eyeing. If you know you will owe the government each year when you do your taxes it doesn’t hurt to prepare in advance throughout the year so you’re not having to come up with a significant amount of money in a short time period that perhaps you don’t have.
I know with refunds you can have portions of your refund direct deposited into different accounts at your choosing. Whatever floats your boat, do you, but remember you only get a refund once a year. Even if you’re getting a refund you want to be strategic in what you do with that ‘unexpected’ money as I like to call it because once it is gone it is gone!
Written By Zoe Mitchell
