Some great uses for your clients’ tax refund, Some great uses for a tax refund

Some great uses for a tax refund

  • April 4, 2018

(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!

About the Author Larry Heinkel J.D. LL.M

Larry Heinkel is a tax and bankruptcy attorney with more than 38 years experience helping businesses and individuals, solve their state and federal tax problems. Mr. Heinkel has been extremely successful in representing his clients before IRS and DOR, and is known throughout Florida as an expert in tax problem resolution.

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