(Assuming they’re fortunate enough to have one) If there’s a refund check coming, it’s a great opportunity to bolster their personal balance sheet. The typical refund is usually around $3,000, and most people receive their money within three weeks of filing their returns.Here are some ways to stay ahead of the game:
• Boost retirement savings – Your clients can contribute up to $5,500 to a Roth IRA for 2017 (or $6,500 if 50 or older) — and withdraw the money tax-free in retirement. They can contribute the full $5,500 as long as their income falls below $118,000 if single, and $186,000 if married filing jointly.
• Fund a taxable account – Buy shares in a mutual fund or stock, but may have felt too risky for an IRA or not available in a 401(k) plan.
• Pay off that credit-card debt – If their card is charging 18%, it’s like earning 18% on investments.
• Rebuild their emergency fund – three to six months of expenses is a good rule of thumb.
• Build college savings – It’s never too early to start for themselves or their kids. Perfect opportunity for a 529 account. Your clients will be able to use the money tax-free for college bills, and they could get a state income-tax deduction for their contribution.
• Your clients can help their kids save – contribute to a Roth IRA for them. The kids are eligible as long as they’ve had earned income, such as from mowing yards or babysitting.
• Prepay their vacation – or put away for holiday gift-giving or other short-term goals.
• Invest in their home or home business – great for smaller projects.
• Plug gaps in insurance – Consider liability insurance and perhaps upgrading home insurance before Spring storms start…or buy a home generator!
• Give to others in need – they’ll feel good about themselves and have a tax deduction for next year!
