The Law Offices of William T. Peckham
Contact Us For A Reduced Initial Consultation
512-487-7604 Contact Us

Tax refunds are not free money

Most of us are excited at the prospect of getting a tax refund and will dream of how to spend that money. But while it is fun to contemplate a spring break trip or simply blowing it on fun stuff, it is essential to remember that the IRS is giving taxpayers back money because they overpaid.

Perhaps remembering this vital detail may cast a different light on it. Since it is the taxpayer's money and not some lottery winnings, it may make more sense to put that money to good use. Indeed, some intentionally overpay their taxes as a way of creating a government-assisted approach to reaching savings goals for the year.

Put that money to work

There are a variety of options for putting that saved money to good use. These include:

  • Paying down credit cards: Credit cards may have a window of low or no interest, but that is followed by skyrocketing interest on the balance.
  • Start an emergency savings account: A special savings account can lessen the impact of losing a job or facing an unexpected illness.
  • Start a retirement account: Whether picking an IRA, a 401(k) or some other retirement account, very few begin saving early enough, nor do they put enough money in these accounts.
  • Invest in real estate: This can mean making improvements to the family home to raise its value or making a down payment on an investment property.
  • Start a college fund: Parents who plan to pay for their children’s college tuition can use a section 529, which provides tax-deferred growth as well as tax-free withdrawals when writing the tuition check to qualifying institutions.

Tax refunds may not be enough

Those who have trouble saving money or find themselves facing insurmountable debt have limited options. While paying down credit cards is smart and trying to save money is important, families may need to look at their finances as they do their taxes to see if they can work their way out of debt. Bankruptcy may be the best or only option when the numbers do not add up. An attorney who specializes in handling bankruptcy filing can be an asset to help make this process go as smoothly as possible.

No Comments

Leave a comment
Comment Information
Email us for a response

Contact The Firm

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

William T. Peckham
1104 Nueces Street, Suite 104
Austin, TX 78701
Phone: 512-487-7604
Fax: 512-478-1790
Map and Directions