Tax season can be a period of new opportunities, especially when it comes to what to do with your refund or how to settle your bill. Here are some possibilities if you receive a refund.
Start fresh. Strengthen your finances by paying down credit card or any other nontax-advantaged debt.
Cultivate. Make some improvements to make your home more valuable, comfortable or energy-efficient — or get ahead on the kids’ tuition.
Nourish. Invest in yourself (a new gym membership or art classes) or someone else (donate to a charity or sponsor a family or individual in need).
Replant. Use that money to get a head start on this year’s contributions to your retirement account, or bolster your emergency fund.
Plan. Some say a refund is just a loan you give the government interest-free. Should you reconsider your withholdings so that you come out even next year?
If you end up owing taxes, you’ll need to decide how to pay. However, before you do, consider how those actions may impact you immediately and over the long run. Liquidating assets in your investment portfolio to pay your taxes may generate new tax consequences and could impact your long-term investment strategy. And, emptying your savings account may leave you vulnerable should another unplanned need for cash arise.
Instead of using the assets working toward your long-term goals, consider liquidity and borrowing options based on the value of your assets or credit cards that offer rewards like cash back or redeemable points. That way, you can access the cash you need to pay your tax bill while keeping your assets where they belong — invested.
Maximize contributions. Take advantage of tax breaks in your retirement accounts and make catch-up contributions once you turn 50.
Harvest losses. Consider balancing your realized capital gains by selling securities for a loss and mitigating your tax liability.
Seek advice. After consulting with a tax professional to discuss your tax situation, contact TFCU Financial Advisors so a financial advisor can help you implement your tax strategy.
The year’s early months are a time of renewal, so use your tax refund wisely.
TFCU Financial Advisors
6501 Tinker Diagonal, MWC
(405) 737-0006
TFCUFinancialAdvisors.org
Securities are offered through RAYMOND JAMES FINANCIAL SERVICES, INC., Member FINRA/SIPC, and are not insured by NCUA or insured by any other government agency. Funds are NOT GUARANTEED nor are they deposits or obligations of the credit union or any affiliated entity of the credit union, and are subject to risk, including the possible loss of principal. Tinker Federal Credit Union, Tinker Financial Services, LLC and TFCU Financial Advisors* are not registered broker/dealers and are independent of Raymond James Financial Services, Inc. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc., a non-affiliated third party provider to Tinker Financial Services, LLC and Tinker Federal Credit Union. All investments and information are intended for U.S. residents only. *TFCU Financial Advisors is a registered trademark and ‘dba’ of Tinker Financial Services, LLC. Raymond James and its advisors do not offer tax advice. You should discuss any tax matters with the appropriate professional.