*Decoration of Veterans Graves, Thurs. 24th, Meet at VFW 5 pm *
HIB FASHION SHOW - Sunday, 2PM - TICKETS AT THE DOOR
Brian Powell. Deans List, Freshman at Providence College,Business,Finance
Library chicks are hatching. Bring the Kids to see it happening.
* Town Election, Tuesday May 22nd, HHS *

Four Ways to Double the Power of Your Tax Refund

by Jay Marsden
March 22, 2017

The IRS expects that more than 70% of taxpayers will receive a refund in 2017.¹ What you do with a tax refund is up to you, but here are some ideas that may make your refund twice as valuable.

Solares Hill Advisors

Jay Marsden
847 Washington Street, Holliston,
MA 01746   
v.617-306-1572

jmarsden@solareshilladvisors.com

The IRS expects that more than 70% of taxpayers will receive a refund in 2017.¹ What you do with a tax refund is up to you, but here are some ideas that may make your refund twice as valuable.

Double your savings

Perhaps you'd like to use your tax refund to start an education fund for your children or grandchildren, contribute to a retirement savings account for yourself, or save for a rainy day. A financial concept known as the Rule of 72 can give you a rough estimate of how long it might take to double what you initially save. Simply divide 72 by the annual rate you hope that your money will earn. For example, if you invest your tax refund and it earns a 6% average annual rate of return, your investment might double in approximately 12 years (72 divided by 6 equals 12).

This hypothetical example of mathematical compounding is used for illustrative purposes only and does not represent the performance of any specific investment. Fees, expenses, and taxes are not considered and would reduce the performance shown if they were included.

Split your refund in two

If stashing your refund away in a savings account or using it to pay bills sounds unappealing, go ahead and splurge on something for yourself. But remember, you don't necessarily have to spend it all. Instead, you could put half of it toward something practical and spend the other half on something fun.

The IRS makes splitting your refund easy. When you file your income taxes and choose direct deposit for your refund, you can decide to have it deposited among two or even three accounts, in any proportion you want. Qualified accounts include savings and checking accounts, as well as IRAs (except SIMPLE IRAs), Coverdell Education Savings Accounts, health savings accounts, Archer MSAs, and TreasuryDirect® online accounts. To split your refund, you'll need to fill out IRS Form 8888 when you file your federal return.

Double down on your debt

Using your refund to pay down credit card debt or a loan with a high interest rate could enable you to pay it off early and save on interest charges. The time and money you'll save depend on your balance, the interest rate, and other factors such as your monthly payment. Here's a hypothetical example. Let's say you have a personal loan with an $8,000 balance, a 12% fixed interest rate, and a 24-month repayment term. Your fixed monthly payment is $380. If you were to put a $4,000 refund toward paying down your principal balance, you would be able to pay off your loan in 12 months and save $780 in interest charges over the remaining loan term. Check the terms of any loan you want to prepay, though, to make sure that no prepayment penalty applies.

Be twice as nice to others

Giving to charity has its own rewards, but Uncle Sam may also reward you for gifts you make now when you file your taxes next year. If you itemize, you may be able to deduct contributions made to a qualified charity. You can also help your favorite charity or nonprofit reap double rewards by finding out whether your gift qualifies for a match. With a matching gift program, individuals, corporations, foundations, and employers offer to match gifts the charitable organization receives, usually on a dollar-for-dollar basis. Terms and conditions apply, so contact the charitable organization or your employer's human resources department to find out more about available matching gift programs.

 

E-mail This Article

Comments (0)

Advertisement

Advertisement

Recent Articles by Jay Marsden:

Is a nursing home the only option for long-term care?

Solares Hill Advisors / Marsden Law P.C. Jay Marsden 847 Washington Street Holliston, MA 01746 jmarsden@solareshilladvisors.com www.solareshilladvisors.com If you or a loved one needs long-term care, other choices besides nursing home care may be available. Here are some of the other options.

Continue ...

Annual Market Review 2017

Solares Hill Advisors / Marsden Law P.C. Jay Marsden 847 Washington Street Holliston, MA 01746 508-858-5324 jmarsden@solareshilladvisors.com www.solareshilladvisors.com The year 2017 was eventful, to say the least. President Trump and Congress tried, without success, to repeal the Affordable Care Act, known as Obamacare.

Continue ...

Key Retirement and Tax Numbers for 2018

Solares Hill Advisors / Marsden Law P.C. Jay Marsden 847 Washington Street Holliston, MA 01746 jmarsden@solareshilladvisors.com www.solareshilladvisors.com Every year, the Internal Revenue Service announces cost-of-living adjustments that affect contribution limits for retirement plans, thresholds for deductions and credits, and standard deduction and personal exemption amounts. Here are a few of the key adjustments for 2018.

Continue ...

What can I do to crack down on robocalls?

Solares Hill Advisors / Marsden Law P.C. Jay Marsden 847 Washington Street Holliston, MA 01746 508-858-5324 jmarsden@solareshilladvisors.com www.solareshilladvisors.com

Continue ...

Questions to Ask Before Buying That Thing You've Always Wanted

Solares Hill Advisors / Marsden Law P.C. Jay Marsden 847 Washington Street Holliston, MA 01746 jmarsden@solareshilladvisors.com www.solareshilladvisors.com Even if you're generally comfortable with your spending habits, you may occasionally worry about how much you're spending, especially if you consistently have trouble saving for short- or long-term goals. Here are a few questions that might help you avoid a strong case of buyer's remorse.

Continue ...

Advertisement

Recent Articles in Comments:

Women Build Homes Two

by Paul Saulnier

Women Build brought 12 volunteers to work on Habitat for Humanity's two homes on Chamberlain Street in Holliston on May 18, 2018.

Continue ...

Tim Maxwell and Suzanne Nersessian are running for a second 3-year term on Holliston’s Finance Committee

by Press Release

Continue ...

American Legion Holds Food Truck Festival to Benefit Local American Legion

by Paul Saulnier

Continue ...

New Seed Library in Town

by Susan Russo

Continue ...

Shaw Lively- Candidate for Parks and Recreation Commission

by Press Release

Continue ...

Advertisement