What are you doing with your tax refund?

If you get a refund when filing your taxes it's kinda like winning the lottery... Sometimes the prize is big and sometimes the prize is small...But no matter the size there is always the question of "What do I do with the money?"  One of my readers asked me just that.

There are so many things you can do with the money once you get it, but first you have to file your taxes.  This year mine weren't too bad and I was able to file them online without too much hassle.  My husband and I have used TaxAct for several years and usually we get by for free for our Federal Return and end up paying about $15 to file state taxes.  My refund is always processed quickly and I am able to make some much needed purchases plus spoil my kids a little.

I do try to get my taxes done as early in the season as I possibly can, but alas the 2015 tax filing season is coming to an end.  Have you gotten your taxes filed already?  If not there is not much time left (the deadline is April 15th) ...What are you waiting for?  If you just need to know where to start my suggestion is an online program, they walk you through the process one question at a time and other than stopping to collect extra documents, if you have to, it's a very straightforward process.  The IRS will even help you choose the sites that will offer you free Federal e-filing by answering a few simple questions here.  For those that need a little extra help you can get by for $50 or less with most of the online programs as well, which is still a lot less than most tax preparation services.

One thing I did not realize until this year is that many of the programs that offer me free e-filing cost her. Now there is a income limit for most of the free programs, but surprisingly it wasn't her income that stopped her from being able to use the same program as me for free... it was her age. Since Mom is over 65 now and unfortunately programs like TurboTax and TaxAct charge senior citizens automatically, we had to go a different route and use FreeTaxUSA that is free to senior citizens too.  I used that program to start her taxes and it was fairly user friendly, but due to a couple of complicated financial details we eventually gave up and handed it over to a tax expert this year.   He said it was a good thing we did, though I'm sure they all say that, and he said that if we make a few accounting changes we should be able to do her taxes on our own again next year.

 So once the hassle of getting your taxes filed is done and you get a refund... What do you do with it?  Of course any financial adviser would tell you to put some back for a rainy day or start saving for your child's college, but really most of us need that refund or at least part of it to take care of an immediate need. One of my readers, that works for The US Tax Center (also free for seniors), shared the graphic to the left with me and that she  is using her tax refund to put together a nursery for her new baby due in July!

For my husband and I that need was a second vehicle and getting a little money in savings again.  When we moved from TN to VA last summer our sedan decided it was tired and the transmission gave out, so we have been down to one car for awhile.  It was going to cost about $1900 to get the transmission rebuilt or $2500 for a new transmission.  So, we did a little shopping around and found a new car for $2900 that had just had a lot of work done, had less miles and was a year or two newer and we chose to go that route instead.  Since it is important to maintain a car once you buy it we also got caught up on some maintenance on our van which was costly, but not as bad as fixing a broken car. I am hoping we can make back some of the money we spent on the new car by selling the original car for parts and have some extra to put back in savings with the leftovers from the refund. 

I also mentioned spoiling my kids... This year we invested in a nice set of bunk beds for my daughters that can be divided into two separate beds when they get older and the beds are solid wood, so they should last for that long too! Plus since our refund was processed so quickly we were able to throw our March babies birthday parties!

I think we did a pretty good job of stretching out our refund and using a lot of it for practical purposes.  We had a little fun with it and then we put some in the bank. What are you going to do with your refund? or What did you spend your refund on? I'd love to hear!