WWW.QNS.COM RIDGEWOOD TIMES APRIL 4, 2019 15
TAX GUIDE
Got a tax refund? Here’s some ways to spend it wisely
While fi ling your taxes can be
tedious, many Americans
often look forward to
receiving a tax refund. But it’s
important to remember that if you’re
receiving money back from Uncle Sam,
it’s because you had too much withheld
and overpaid your taxes last year - it’s
not really extra money.
So before splurging on a dinner
out or a weekend getaway, consider
these steps to put your tax refund
to work this year, setting yourself
and your family up for long-term
fi nancial success.
1) Pay down your “bad” debt.
Eliminating your debt, especially
the high-interest consumer debt with
no tax benefi ts, makes it easier to
reach your fi nancial goals. If you’re
carrying a balance on your credit
cards or other high-interest loans,
use your tax refund to pay down these
expensive debts.
If you’re still not down to zero aft er
you use your tax refund, continue
to make this a high priority in 2019.
When it comes to smart money
management, the only thing more
important is contributing to your
company’s retirement plan at least
enough to receive the maximum
employer match. Often, those
contributions are taken straight
from your paycheck before your
taxes are deducted. Whether your
employer matches 50 percent of your
contribution or dollar-for-dollar
up to a certain amount, it’s hard to
beat that kind of return, even in a
bull market.
2) Build up an emergency fund.
Unexpected situations happen
frequently, but most Americans
are unprepared. Schwab’s 2018
Modern Wealth survey found just
35 percent of Americans have an
emergency fund.
It’s best to tuck away between
three to six months of essential living
expenses in a savings or money
market account. Your money won’t
grow much in these types of vehicles,
but it will be easily accessible when
you need to pay bills in case of a job
loss or unexpected illness. Having
some cash ready for unexpected
situations will help you avoid
expensive and unwise alternatives
like living off credit cards, being
forced to sell investments at an
inopportune time, or withdrawing
money from a retirement savings
account, which often results in
having to pay early withdrawal
penalties.
3) Max out your retirement
accounts. Even if you have a 401(k), an
Individual Retirement Account (IRA)
can be a great way to supplement
your retirement savings. Try to
contribute up to the IRS maximum,
which is $6,000 in 2019, plus an extra
$1,000 if you’re over the age of 50.
For most people, the above steps
should be taken in order. If you still
have more refund to put to work (or
took these steps before you even got
your refund!), here’s how to think
about saving for other common goals.
The exact order of these might vary
depending on your situation:
4) Consider other tax-efficient
saving and investing accounts: If
you’re trying to save for college for
your kids, contribute to a 529 college
savings plan or education savings
account, which both benefi t from taxdeferred
growth on your investments.
You could also contribute to a health
savings account (HSA), which is taxadvantaged
savings and investment
account available to people with
high-deductible health plans.
5) Save for a down payment or pay
down your mortgage. Alternatively,
you may consider saving for the
down payment on your home or
making an extra payment or two
on your mortgage or student loans.
While those are considered to be in
the “good” debt category since they
are tax deductible and can help boost
your credit score, eliminating your
debt ultimately helps free up future
money for other uses.
6) Treat yourself or keep
investing for something bigger.
Once you’ve addressed your savings
goals, you may consider if there’s
any left to treat yourself and your
family. But make it something you
really want, or if you’re still working
toward a bigger goal, keep saving or
investing for the long-term.
While these steps are especially
important when you’re trying to
prioritize how to save and invest,
they’re applicable to much more than
just your tax refund. Smart saving
and investing behaviors are key to
helping you reach your long-term
fi nancial goals.
Courtesy BPT
JoeZel Associates Inc
“Income Tax Professionals”
Specializing in
Individual and
Small Business
Income Tax
Preparation
One wrong decision can cost you $$$,
you need a professional,
not a “part time” tax preparer.
Reasonable Rates
FREE ELECTRONIC FILING
For Fast Refunds
“when we prepare your return”
Call for your appointment today!
Ask for Joe Zelaskowski, CPA
516-526-2089
62-70 Fresh Pond Rd., Ridgewood NY 11385
joezel15@gmail.com
Call Now & End Your Tax Nightmare!
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Co-Author of the
best selling book
“Breaking the Tax Code”
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Salvatore P. Candela, EA, ATA, ABA
Enrolled Agent - Tax Advisor
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