Maximizing Your Tax Refund

First of all, remember that a tax refund is not a gift. It's an interest-free loan that you gave to Uncle Sam, and now he's paying you back. With that in mind, consider the options below to maximize the use of your tax refund.

First, consider adjusting your withholding in order to receive a larger paycheck and draw closer to breaking even next tax season.
Have you established an emergency fund? Money Market accounts are great for beginning a cash emergency fund for unexpected life events while accruing a small amount of interest. Whether a sudden car repair or broken water heater, a well rounded emergency fund is extremely beneficial for everyone.
Next, address your existing debt. Whether it’s your credit card(s) or your car loan, paying down existing debt will prevent or lower accruing interest. Even though your tax refund might not pay off your car loan, it will lower your interest payment and add to the equity in your car.
Make your “free money” make more free money. Consider making a contribution to your IRA and watch your money grow for your retirement years. Although it may not sound like fun, letting a retirement account grow can give that much desired peace of mind for retirement planning.
Finally, have you thought about a college savings plan for your child or grandchild? Considering the rising cost of higher education, college savings plans provide valuable tax incentives, including the potential for tax-free growth and in some states, like Iowa, a state tax deduction for contributions. The 529 College Savings Plan and the Coverdell Education Savings Account (ESA) are two of the newer plans. These plans offer an excellent tool for tax-free wealth transfer.

Consider these options to maximize your tax refund and contact Donna Sanders at (319) 364-2945 or dsanders@tld-inc.com to learn more.

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