What To Do With A Tax Refund
My wife and I filed our taxes this evening. The process was pretty straightforward and only took a few hours. We have a small refund heading our way – we plan to use it to help rebuild our long-term cash savings.
Over the years, we have used our tax refunds for:- funding our emergency fund, purchasing furniture for our new home, paying off credit card debt, and going on vacation.
In a perfect world, we would have our withholding dialed in, and our refund would be very, very small. As many have stated before, there’s no reason to give the government a “tax free loan”. The reality is, our income fluctuates each year, and we would rather play it safe and over-withhold, rather than get stuck with a tax payment at filing time. Also, I had some business-related expenses that reduced my taxable income more than I had anticipated.
Over the past year, we have begun the process of rebuilding our cash reserves. I had to deal with a series of medical expenses in 2016 -which cut into our savings. The tax refund will go towards our six-months-of-expenses savings.
What do you plan to do with your refund?
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