BY Airman Grace Nichols
19th Airlift Wing Public Affairs
With the stress of military life and the added pressure during tax season, it is easy to just spend your refund rather than set it aside for future use.
“There are two things people like to do with their tax refund. The first is the most fun: go buy something nice. The second is to pay off debts,” said Rick Tomaskovic, a Community Readiness Consultant at the Airmen & Family Readiness Center. “Since most people have little to no emergency savings, that is what we focus on when making recommendations to clients.”
Here are some helpful tips from Military OneSource to keep in mind:
• Change your W-4 withholdings if your refund is big: if you received a tax refund, it means you paid more taxes than you owed, and you may want to adjust your tax forms for the next year so you can grow interest on that money instead.
• Pay down your debt: use your refund to pay off that high-interest credit card or another lingering bill.
• Start an emergency fund: open a savings account and try to build up enough money to cover your expenses for three to six months.
• Contribute to your Thrift Savings Plan: you can never save too much for your retirement, so think about making an extra contribution.
• Save toward a large expense you may be contemplating such as on a home or vehicle down payment. A larger down payment will lower your monthly payments and your interest costs.
• Tackle some home improvements or repairs: minor home or car repairs now can prevent a budget-busting bill down the road, so fix that leaky pipe before it becomes a tsunami.
• Hold off spending your refund until you get it: wait until you actually get your refund to spend it, even if you’re sure about how you want to use the money: paying cash for a splurge will keep it off your credit card bill and possibly make you think twice about the purchase.
“If the debts are significant, we will always allocate a portion to that. But the one thing we generally don’t recommend is using a tax return to finance a big purchase,” said Tomaskovic. “If someone has a large tax return and no debt we would advise them to add to their savings for emergencies or other near-term needs. “
For information regarding filing taxes and available benefits, contact 987-7886.