I have been working on our taxes and it looks like we will be getting back a small refund – think hundreds, not thousands.
My wife and I usually over-estimate withholding, just a bit, due to the fact that I have self-employment income, which tends to vary from year to year. We prefer to send in a bit more, just to be on the safe side.
We will use our modest tax return for three things -
Vacation – We are going to take a week-long vacation to the beach this summer (for which we have budgeted) – and about 25% of our refund will go towards extras, like bike rentals or a trip to putt-putt. We have three kids, so there’s always room for “one more thing” to do while on vacation.
Mortgage Reduction – We will use about 50% of our refund to reduce the principal on our mortgage. We are working to pay off our mortgage in less than 10 years – and every extra penny helps. (I ran the numbers: A one-time principal-reduction of $300 will reduce total interest (for the life of the mortgage) by about $150.)
Landscaping – We have a couple of flower beds that need some work – and the extra funds will go towards the purchasing of some new shrubs and some fruit trees. This will increase the curb-appeal of the property (and hopefully, the value of the property).
Have a blessed day.