We’re back to taxes again?
Yes, but this is the happy part of taxes: the long-awaited refund check!
According to the IRS, the average tax return last year was $2,899. Nearly $3,000—that’s a lot of money.
Do you have some ideas about how we should spend it?
You bet I do! According to a 2012 survey by TurboTax, many people say they are being responsible with their tax refunds: 42% plan to use the money to pay down debt and cover bills and 25% plan to save it. But others are splurging: 15% of taxpayers plan to treat themselves to a vacation or shopping.
If you’re one of the people lucky enough to get a substantial tax refund this year, be smart about how you spend it. Remember, even though it may feel like “found” money from an unexpected windfall, you earned that check by working hard—the same as you do every other paycheck, so don’t blow it on 2,899 lottery tickets.
Top priority: Pay off your credit card. It’s far and away the smartest thing you can do.
Next: Maintenance work. Schedule those car repairs you’ve been avoiding –new brakes, tires, a tune-up, oil change—you know the drill.
Or maybe you have house repairs to do? Use the money to pay for removal of storm-damaged trees, and have some replacement trees planted with any leftover money.
Or take that money straight to the bank. Do you have a rainy day fund? Everyone should have at least three months living expenses in a secure savings account.
What if I’ve already done ALL those things?
Well then we can have a little fun! My first suggestion would be to put the money in the bank, so to speak. But this time I’m speaking figuratively. Don’t put it in the actual bank, but invest the money in your future. That means opening a mutual fund account or how about opening a Roth IRA if you qualify for one? The earnings grow tax-free, meaning you can reap the benefits in retirement without having to give a slice of the pie to Uncle Sam.
Remember, Roth IRAs are subject to income limits. If you file your taxes jointly with your spouse, your income needs to be below $178,000 for you to be able to fully contribute to a Roth IRA. If you make between $178,000 and $188,000, you are in the “phase-out” range and the amount you can contribute—$5,000 in 2013—starts “phasing out.” At $188,000 you are unable to contribute to a Roth IRA.
For people filing their taxes as singles in 2013, your income needs to be less than $112,000 to fully contribute to a Roth IRA, and your phase out range is between $112,000 and $127,000. It’s one of the few times that earning less money actually works in your favor!
Another way to spend the money wisely would be to take a course and learn something, making an investment in yourself. There’s an old saying “empty your pocketbook into your head.”
None of these suggestions are all that fun.
Well, I may have mislead you at the beginning. Planning for retirement isn’t all that sexy, I guess, but neither is eating cat food when you’re 80. Let’s say you’ve done everything right—You have your rainy day fund and are maxing out your retirement plans and your house and your car are in top condition—okay, what can that $2,899 buy you?
You could buy 525 “tattoos for babies” from a website called “stupid.com.”
Here’s my final suggestion: Kick in another $182 and you can take the kids to Disney World. The average refund will cover airfare, a four night stay at a hotel plus park passes for a family of four.
Airfare from where?
Dallas, of course! We’re all set for next week!
I have to leave you with this: If you get a refund from the IRS, it means you paid more in taxes than you actually owed, in effect giving the government an interest-free loan. The IRS doesn’t send you a check as a little “thank you” gift for filing your taxes—they’re just returning YOUR money. In the future, make sure you’re claiming the right number of deductions on your W-4 or ratchet back the amounts you send in for quarterly estimated tax payments.
Also On Black America Web:
This Week’s Celebrity Instagrams (11/26-12/2)
30 photos Launch gallery
1. Little Legend and Puddy 😍😍😍😍
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2. "You on point Phife?" "all the time,Tip". 💥 #bannedfromnormal
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3. Vegan! The Impossible burger at Crossroads
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4. Lawrence #BeforeandAfterEpisodes 1-4: 184lbs 13% body fatEpisode 8: 196lbs 8% body fat S/O @coachdaveboxing with the works outs and @kildareriordan with the nutrition
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5. Jus haaaanngin out
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6. Meanwhile back at home in Atlanta GA someone mad they not on the 🛳. 😳
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7. No limits... Photo cred: Chris Bridges @ludacris
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8. new new
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9. Apparently my 260lbs is too much for the actual vines in the Hawaiian jungles to hold me without breaking and me falling hundreds of feet. So for safety purposes, I'm forced to swing thru #Jumanjj on wires strong enough to hold 12 adult buffaloes and 1 adult Rock. #OnSet #Jumanji #IronicallyIEatBuffaloDailyForLunch #MoreManThanNatureKnowsWhatToDoWith
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10. hey ma! 🎎#wcw 💙
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11. Surprise visit to our factories!!! #GoodAmerican #USA
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13. Peachy Keen 🔥✨⚡️
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14. If this don't look thankful I don't know what does. Happy Thanksgiving to you and yours. #UltraBlessed #24kMagic #SweetPotatoFly
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15. Late nights @nbcmarlon with the writers... we in here!!!
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16. There goes my baaaaaaaaabbbbyyyyy #QueenKingMagic!!! We're up to something! Ira BIG!!! Stay out our buisness -
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17. You want to win every game you play but when you come home to these faces... who cares. #ILoveYouGirls best part of my day, everyday!
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18. Steady,steady..... full size jenga.. "I got this one "???? Or do I ?
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19. Cornrows kind of day 😉@dontaysavoy2 you convinced me and I love. ❤️️
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20. #BrotherlyLove #tbt
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22. #basel #TeamLOVE @kingcombs
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23. Just introduced a special screening of @directher 's groundbreaking (must see) documentary @13thfilm with my brother @themichaelealy | @unitedblackout #blackoutblackfriday
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24. Me & Vanessa Williams giving #DuckLips #Pose on the set of #DaytimeDivas @vh1 - Coming Soon to a tv near you. Lol. - My make up done by @makeupsurgeon
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25. This picture just makes me wanna praise the Lord, you hear me!!!!!! Yes Lord brotha #TEDDYCAMPBELL What a #man !!! You are everything right on this picture husband ......... #gorgeous #stylish #classy #strong #masculine #king #sexy #debonair #gentlemenstyle And that #bible in your hand just seals the deal for me (probably cause i know that, that is what helped you become just as amazing as you look😘). While my heart and mind experiences the goodness of God at #church on Sundays, my eyes experiences the goodness of Teddy😍. Amen somebody🙌🏽. "Bless the Lord oh my soul and all that is within me bless his holy name" #myman #myhusband #goodman #blackman #dapperman #godlyman #goodfather #mybestfriend
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26. Yesterday was my mama's 53rd birthday!!!!! Got to celebrate with her all day. If this is what I have to look forward to I can't wait. Looking like a soft bucket a cocoa butter. Yaaaaaaaaaas! 😍😍😍 love you mommy!
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27. "Shout out to @PureAtlanta for getting the family right"....I'm loving this jogger. 😍😍
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28. This pic warms my heart ❤️ #myLogiebeans and aunt aunt umba @itowandabraxton 😘
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29. You will always be my baby😜. #HappyBirthdayReginae #mybaby18
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30. GC "Gods Child" Red on Red SweatSuit available now at www.MonicaApparel.com ... Take Your Crown wherever you go!! I'm pictured in a Medium... Go to the site now for other options ... cc: @trukernell
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