You've been waiting since the final penny of last year's refund was spent to get this year's tax return. Now that the check is in the mail, you can't decide what to pay off and what to buy. Here are a few tips to not only make sure you are getting the most you can get back, but to also make sure you're spending every dollar wisely.
Check for little-known deductions
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Do you work from home? Pay dry-cleaning costs for a uniform? Maybe you attend charitable events often? According to the Turbotax article Top 10 tax deductions you're not taking, you could be eligible for more deductions than you realize. Things like your gas mileage to and from a fundraiser, or a portion of your utility bill if you are working from home, can be tax write-offs worth exploring to give your refund a boost.
Schedule A on your tax return will help you plan out which deductions you can apply this year.
Make a list of wants versus needs
If you are lucky enough to get a refund this year, the best thing you can do before spending your extra cash is to make a list of where the money could go versus where the money should go. Weigh the pros and cons of paying off bills against taking that long-awaited vacation. Putting it all down on paper will give you a clear picture of your financial situation, and help to make the decision easier.
Examine your interest
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It might be tempting to pay extra on your mortgage or your car payment, but in the long run, your money might be better spent somewhere else. Paying down a higher-interest credit card or a loan with an adjustable rate may save you much more in future funds. Start with your accounts that have the highest interest rates, and pay down your bills from there.
Alternately, if you are planning to keep the money in an account for a bit, tuck it away somewhere that is worth your while. Try a high-yield savings account or consult a local financial planner to discuss your best options for making the most interest on your money before you let it sit in your savings account.
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