Create a Tax Deduction for Next Year
Your most important tax deduction is your annual business trip.
Get your money’s worth. When traveling for business, pay for the most expensive airline seat available. Yes, you’ll be less comfortable, but it’s tax deductible. You can also justify expensive seats if you travel a lot.
Some companies require a minimum stay at a hotel or resort. Get the most expensive room or suite using this excuse: “We have to rest and be refreshed to work our best.” Whatever your company says about spending responsibly on business travel, this excuse is a great way to justify pricey travel accommodations.
No business travel? No problem. You’ll still be able to deduct the hotel costs you incurred while on vacation.
If you have to stay in a hotel the night before an early flight, you can deduct that, too.
As you can see, there are many ways to enhance your business travel experience and boost your next year’s tax deductions.
Invest in an S&P 500 Index Fund
If you still haven’t purchased that dream home or vehicle, it’s never too late. You can invest the tax refund money and start contributing towards the future home and/or vehicle for yourself, spouse and children. Also, you can set aside a sum from your monthly paychecks to cover the monthly house and vehicle installments. Though you are contributing towards the future, you don’t need to wait until the end of this year or the next year to become the proud owners of your own home and/or vehicle. You can take your tax refund money and pay off the monthly installments of your dream home or vehicle right away. The key is to start right away.
There are many advantages with investing in an S&P 500 Index Fund. One, you can invest a very small amount for an index fund. You receive the benefits of the experience, research and analysis of the top investment gurus. The risk factor for losing all your invested money is very low. Even more, it is a passive income. The portfolio grows by itself until you need the original funding to make a purchase or investment.
Invest in Your Career Or Business
Think of your tax refund as a bonus. You can choose to spend it on the latest smartphone or tablet, but chances are your career or business will be a better investment. For example, if you are involved in side-hustle business such as dog walking, you can use the tax refund money to purchase a new pair of walking shoes.
Another way to invest your tax refund money is to buy a new camera. People are more likely to hire you to take pictures if you already have the essential equipment. The only problem with this is that you may be tempted to spend more money on camera accessories and other goodies. This defeats the purpose of saving money.
You can also use your tax refund money to pay down your credit card balances. This is a good move if you are close to your credit limit. However, this will only benefit you if you stop using the card and pay off the remaining balances within a reasonable time.
Another great idea is to use your tax refund money to buy stocks “ the same way the rich always do. If you’re interested in this, you should take some finance classes first. You can also read some finance books so that you will know which stocks to buy. If you’re currently employed, you can ask your co-workers for advice.
Pay Off a Small Debt or Two
When you get a refund, it means that you overpaid your taxes by that amount earlier in the year. If you have a small debt like a credit card balance, car loan or medical bill don’t forget to pay it off.
You can probably open a pre-paid account with the IRS, so that you can pay off your debt without a late fee. This may not be for everyone, but it’s an option and can help you to avoid paying 12% interest.
Tuck It Away in a High-Yield Savings Account
Your tax refund can help you to pay off high interest debt. But if you just use it to pay off the debt, guess what? You’ll be saddled with even more interest on your credit card.
A better way is to deposit your refund into a high yield savings account. You will get a better interest rate than on your current credit card, and you will pay off your debt faster.
No matter how bad your financial situation is, there is always light at the end of the tunnel. Saving your refund for a rainy day is a good idea.
Create an Emergency Fund
One of the best things to do with your tax refund is to create an emergency fund.
If you have ever experienced an emergency like a car crash, you can attest to how important it is to have sufficient savings to get you through that time.
These types of events have huge costs attached to them.
And the fact is that if you are prepared, you can deal with just about anything life throws your way.
Create Another HSA
If you use a Health Savings Account (HSA) to pay for medical expenses now, but not the full amount each year, consider opening another HSA.
In effect, this allows you to use the tax refund to make a catch-up payment to the HSA and pay for a greater range of health expenses.
Give Back With Your Investing Choices
If we bundled three of the options together, the first two are giving back AND saving. Why wouldn’t you want to be a philanthropist? You could either donate your investment directly to your favorite charity, or you could direct your bank to make investments in socially responsible companies. (Remember: responsible means socially conscious investing isn’t a guarantee of financial success.) After all, an investor should pay taxes as little as possible.
Make an Education Investment
If you are planning to go back to school, your best bet is to borrow and then pay yourself back. Interest on student loans is tax deductible, so making an investment in your education is smart, effective, and responsible ….if you can afford it, of course. If you still owe a substantial amount, you should definitely figure out how much you can pay toward your loans instead of splurging.
Save for Retirement
The best use of your refund check might not actually be for you. By investing it wisely and continuing to save, you can elevate yourself out of the working world sooner and into the retirement world. The sooner you can retire, the better … you’ll be in the world of “me-time” sooner and have more room in your budget to recover after you exit the working world.
Summary
{1}. Prepare for the Coming Winter and Purchase Some Winter Coats
{2}. Make a Down Payment on Your Dreams
{3}. Put the Money Away Just in Case
{4}. Get a Handyman
{5}. Purchase Roof Repair Materials
{6}. Wisely Use Your Tax Refund Money on Home Energy Efficiency Upgrades
{7}. Trigger Savings You Can Live Off