I have been working on my taxes and it looks like my wife and I will be getting an income tax refund this year.  That’s good news, because we are in the process of paying off our mortgage and every extra penny counts!

A certain portion of our household income comes through self-employment, so judging withholding can be a bit tricky.  We tend to ere on the conservative-side and over-withhold – which usually leads to a bit of a refund.

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Here are a few ideas for what to do with an income refund, including what we are going to do this year -

Create an Emergency Fund – This was so important, for us, when we were preparing to get out of debt.  The first thing we did was create a mini-emergency fund – with around $1000.  This cash reserve kept us out of the credit-card cycle and really helped us.

Pay Down Consumer Debt – This is No Credit Needed, right?!?  We are going to ALWAYS talk about debt reduction.  When were paying off credit card debt, we funneled every extra dollar into our debt snowball.  This was true for tax refunds.

Start a Side Business – I have done this, using income tax refund money to purchase domain names and pay for hosting.  This year’s focus is The Grace Station – where I blog about faith, grace, and other spiritual matters.

Fund a Loan – Peer-to-peer lending is pretty cool.  Check out 9.09% Returns With Prosper.  It’s a pretty cool way to make some extra money, while funding peer-to-peer loans.  Be sure you understand the risks involved!

Open a Retirement Account -  Several years ago, I used a portion of an income tax refund to open up a Roth IRA.  Now, our savings are growing, tax-free, which rocks.

Plan a Vacation – A small portion of our refund will go towards the reservation at our favorite vacation spot.  We get a 20% discount for early reservations, so getting in early helps us save money.

Help Someone – Take a look around and see if there’s an individual or organization that you can bless – and then bless them.  This year, we have two local charities that we are going to support, with a portion of our refund.

Save for a Down Payment – We purchased our home four years ago (time flies!) – and we were able to both afford our home and get a low interest rate, in part, because we had a sizable down-payment.

Make an Extra Mortgage Payment – Have you run the calculations, lately?  It’s amazing just how much money, over time, and extra mortgage payment can save!  We are trying to pay off our 15-year mortgage in less than 10 years, and making an extra payment (or two or three) will go a long ways towards our achieving our goal.

Start Coin Collecting – Spend a few bucks of your refund on A Guidebook of United States Coins 2014: The Official Red Book and then keep your eyes open for rare coins.  My son and I have started collecting coins, mainly by sorting through our change and getting a few rolls from our local bank, and we have actually found several coins worth more than their face-value.  Pretty cool.

This year, we are going to use a portion of our income tax refund to reserve a spot for vacation, a portion for paying down our mortgage, and a portion for charitable donations.

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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.

I spent an hour last night working on our taxes.

I have entered information about our income, child care costs, and various deductions.

I am still waiting on a couple of tax-related documents, so for a trial-run, I estimated.  It looks like we will be receiving a small refund from the federal government and owe a small amount to our state government.

I can remember the first time I filed taxes.  I was still living at home with my parents – and we went to the local library to pick up paper forms for the 1040EZ.  That was more than 20 years ago.

Now, I file online via H&R Block At Home Online (Save 15% ).  The process is simple, with a step-by-step guide.

Even as we are making progress in paying off our mortgage – it’s still discouraging to see just how much we spend on INTEREST.  Man, I cannot wait until the day when we own our home, free-and-clear.  Until then, we keep working the plan.

I plan to file in the next couple of weeks and will have any refund or payment automatically deposited or debited from our online checking account.

Taxes.

We all have to file them, so why not get an early start – and save a little money.

H&R Block is offering a 15% discount on their At Home Online Tax Software.

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The discount is good on their basic, deluxe, premium, and premium & business software.

When my wife and I were getting out of debt, we used our tax refund to reduce our total debt balance.  I like to file relatively early, especially if I know that I might be getting a bit of a refund.

In a perfect world, we would get neither a refund, nor would we owe any money, but with our irregular income, estimating withholding can be difficult.  So, we use software, run the calculations – and then we know for sure whether we are getting a refund, or if we are going to have to write a check.

Click the image below to Save 15% on H&R Block At Home Software -