As the New Year rolls in the majority of us are trying to plan New Year’s resolutions. This can be a variety of things from new diets and exercises to better management of your financial assets. A huge bonus that every working person looks forward to each New Year is the annual income tax refund. This feels like a bonus to those of us who do not get an annual bonus on top of our yearly salary and it is very easy to spend the extra money in a celebration of splurge spending. However, is this really the smartest way to invest your income tax?
With the way our economic times are looking it is best to wisely invest any extra money we can get, but many people do not know where to start. So here they are.
Four ways to effectively use your income tax refund.
It is very easy for us to get excited by this boost in income. However, you may wish to consider your options before you go out and celebrate by splurging.
Pay Off Debts
You might wish to take into consideration paying off any bills or debts you might have. Most credit card companies charge high interest rates on the money they loan out, if you find yourself with debts that you are working on paying off, this is a great opportunity in doing so. This is a great way to start the year off on a positive foot.
Another wise move with your income tax refund is to simply put it in your savings account and forget about it. If you do not have funds in your savings account and an emergency were to come up then you may find yourself in a bit of a predicament. This emergency could be the need to attend the E.R. or maybe even your car breaking down. There are always unexpected occurrences in life and it’s better to stay prepared.
You may wish to choose to invest your money where it can grow. You may wish to look into purchasing stocks or bonds in order to grow your money at a quicker rate. There are both high and low risk investments you can make, choose based on how much money you can afford to risk. You may not wish to put your entire income tax return into an investment. But you can definitely use a percentage in hopes of increasing your profit.
Increase your Asset Values
You can use the money to make home repairs that might not have fit into your previous budget. Your home is going to need maintenance anyways, might as well use your income tax to fix these minor repairs while you are ahead of the game. You may even wish to join training programs in order to gain more skills that will give you an edge in order to negotiate for a raise.
The deadline for filing your income tax return is usually before April 15th. However, you can file it earlier or later but there are some factors to take into consideration.
You can file your income tax refund as early as January. This is a great time to file because your schedule has most likely not yet picked up from the holidays. Most people do not look forward to the tedious task of filing taxes. But the sooner you file your income tax refund, the sooner you will receive your money. If you file your taxes electronically you will be able to complete them early on in January, but if you wish to file them with an expert you can look at beginning filing around the start of February.
Filing on Time
April 15th is the deadline preferred by the IRS, if the date falls on a weekend or holiday it will be moved to the next available business day. There is nothing wrong if you wait till this date before you file. But you will have to face being in line with all the rest of the last minute filers. You will also face longer waiting periods in order to receive your income tax refund as the IRS will be backed up with everyone else’s returns.
If for some reason you are not able to file your taxes on the due date, you will need to apply for a filing extension before the deadline of April 15th. You will then have until the 15th of October to file. There will be no penalties for filing late, however, October 15th is the last day available to electronically file for your return. After that you will have to do it the old fashion way.
The sooner you file your income tax refund the better. As this will help you build your budget for the year, knowing the money that is coming in. In having the money available you will be able to tell where to put the money for the optimal outcome.