Making The Most of Your Tax Return -Josh Wilcox
by Corey Poulosky on Apr 4, 2017
As Benjamin Franklin put it many years ago, “In this world nothing can be said to be certain, except death and taxes.” With April 15th fast approaching at least one of those things may loom large in your life (possibly both if you are afraid you’ll have a heart attack when you see how much you owe). For many out there, though, you may be celebrating a nice check from Uncle Sam for your tax return. While I’m not a tax expert or accountant, I’d like to take this month to help you get the most out of that return.
First, it’s important to understand where your return comes from. While it may be fun to get a check for a few thousand dollars in April every year, it isn’t free money. This is simply a return of taxes you have overpaid throughout the last year. In essence the IRS is returning money that you lent them, interest free, over the last year. If you have trouble saving money it can be a way to prevent you from overspending, but if you save well it’s likely taking money that you could be using to grow your savings each month in vehicles providing you a potential return on your money. This simple calculator from Kiplinger can help you determine how many withholdings to claim to maximize your take home pay.
After you’ve determined your most advantageous tax strategy it’s time to make the most of any return that you do get. The simple answer is save it. Unfortunately, that’s not always the easy answer. It may be a great way to pay off any high interest debt you’ve accumulated over the last year. It may also be a perfect time to jump start that retirement savings you’ve been neglecting. Even a few hundred dollars into an IRA or Roth IRA has the potential to grow into a sizable retirement nest egg. Finally, remember to review your insurance coverage. Premium payments can be scary, but even a small return may be enough to purchase a sizable term life insurance policy to help protect your family from the unknown.
As with any financial planning it is important to consult trusted advisers as you determine the most suitable strategy for your unique situation. A trusted accountant is an important expert to have in your team of advisers. While Ben Franklin was right in his assessment of the certainty of taxes, I hope this allowed you to find some ways to make the most of your personal tax situation.
To read more from Josh you can read more from his blog here!