by Nancy Zambell | April 6, 2012 2:00 pm
My parents were working people, with five children (deductions!), which meant they received a nice little check each year after filing their taxes. They didn’t have the benefit of a good tax adviser and didn’t understand that it was their money that Uncle Sam was returning to them, year-after-year. In fact, they were giving the U.S. government a tax-free loan!
Imagine what that $1,000 or so they received, annually, could have turned into had they been putting it away, instead of being so generous to Uncle Sam.
But that was then, and my folks weren’t any different than most people on our block. But in today’s world, with so much good (and often no-cost) advice, there’s almost no excuse for letting Uncle Sam have free use of your money. All it takes is a little calculation to determine how much less you should be paying in throughout the year so that you just about break even by Dec. 31.
For many people, it’s this simple: Let’s say you’re getting about $1,000 back every year from your tax refund. Divide that by 12, and you get $83.33 — the amount you should reduce your paid-in taxes by each month. Just call your payroll department, and they’ll give you the right form to do that. Wouldn’t it be better to have that $83.33 in your pocket, instead of lending it to the government each month?
That’s a great strategy for 2012. But if you’re expecting a refund from your 2011 taxes, let’s look at the worst and best ways to spend that windfall:
Instead of wasting your refund, consider putting it to good use in the following ways:
These are hardly the only great ideas for getting the most from your tax refund, but they’re my favorites. Bottom line — don’t waste the money. And for 2012, change your deductions so that you can turn that extra money in your paycheck into a greater stockpile each and every year — a seed that can grow into a worry-free retirement.
Source URL: http://investorplace.com/2012/04/5-worst-and-best-ways-to-use-a-tax-refund/
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