Best Use of the Tax Refund

Tax time starts creeping up as soon as the calendar turns to the New Year. No matter how you feel about the experience, it is one that has to be done. What you do after filing your taxes may be the key to setting the tone for your financial future. Finding the best use for the tax refund starts with careful planning and then continues with consistent follow through.

Making Plans for the Tax Refund

1.      Make a list of all the places you would like to use the tax refund.

2.      Put them in order of most important to least important.

3.      Estimate cost of each of the items.

4.      See how far the tax refund would go if you were to spend it on each of the items on the list.

5.      Repeat the process several times over the next few weeks to see if your needs, wants or desires begin to shift.

6.      Only begin to make your purchases AFTER the tax refund has been deposited.

Possibilities for the Tax Refund

  • Look at the big expenses. The last year was a tough one for many people trying to meet the expense of a mortgage. A portion of the tax refund could be used to set up an account that would cover three to six months worth of mortgage expenses if necessary. It would provide some security for the upcoming year.
  • Consider the unexpected. The cost of insurance deductibles, surprise auto repairs or even medical expenses can hurt a budget that is already on tight ropes. One of the best uses of the tax refund can be in setting up an emergency account that would only be used to cover any of those unexpected costs.
  • Pay off a debt. The release that comes from paying off a debt can be a great motivator for tackling the next debt. Review any rotating credit balances or other outstanding debts. Consider using a portion of the tax refund to pay off that balance in full.
  • Invest in the future. Now may be the best opportunity to attend that seminar or take that class that will help you move up the ladder in your career. Measure the amount of increase you will receive with the amount of investment (including time, energy and finances) that it will cost and then thing about taking that leap.
  • Give it away. Put a portion of your tax refund to work for others. Setting aside as little as 10% can go a long ways towards helping your favorite charity meet its budget demands.
  • Invest in a little fun. The tax refund represents a full year of work. Splurge a little on something fun or exciting for the family. Set aside a portion of the tax refund for a great vacation or for a toy the whole family could enjoy (like that outdoor pool table you have been talking about).

There is never one way to spend the tax refund, but there can be one best way. It all starts with preparation. Thinking about the money and how it should be spent will start the process moving in the right direction. Evaluating the options several times begins to focus in on the best choices. Waiting until the check has been deposited will help to complete the package.

No matter when you plan to face down the tax man, start planning on the refund right now. The more time you invest in planning how to best use the tax refund then the more likely you are to make choices that will push you towards a solid financial future.

Nicole has been in the finance industry for 3 years, currently she blogs about the different ways for people to maximize their savings through the use of a brokerage account.

Costa Rica And The US Overseas Retirement Market

For many US baby boomers with nest eggs that have shriveled during the recent financial crisis, an overseas retirement can make financial sense. Once they shift their perspective offshore, the Central American region captures a fair share of attention given its close proximity to the US. There are many connecting flights that travel daily from US airports. Costa Rica attracts more retirees than its neighbors, and here are some of the reasons why.

Costa Rica has been a popular vacation destination for decades, as well as a hot retirement spot. In fact, the country boasts the largest population of US expatriates in the region, so current retirees are following in other US citizens’ footsteps.

Costa Rica is aggressively attracting retirees by launching the first ‘retiree program,’ which offers tax benefits, exemptions, and discounts. Panama, Nicaragua, and Belize have all followed suit, rolling out their own retiree programs, but Costa Rica was the first country to put such a policy in place, actively seeking out retirees.

Costa Rica has long held a tradition of environmental protection, as evidenced by the country’s tourism slogan, “No artificial ingredients.” Tourists aren’t the only ones enjoying Costa Rica’s biodiversity. Retirees also take advantage of the national parks and beautiful landscapes.

Retirees prefer to move to more established parts of the country that provide well-serviced amenities and infrastructure. Costa Rica has a number of well-developed second home and retirement destinations available. The country is sometimes known as “The Switzerland of Central America.” Combine this with a stable democratic government and a diverse economy, and it’s easy to see why investors, tourists, and retirees flock to Costa Rica.

There is also Costa Rica’s lower cost of living to consider. Real estate in Costa Rica is much more affordable than the US. There are other countries that are cheaper, such as Nicaragua real estate for example, but Costa Rica can still provide retirees with a lifestyle they could not afford in the US.

Settling Tax Debt

Filing for tax returns and finding money for those ridiculous taxes are enough stress that can add another wrinkle in one’s aging memorabilia. However, these things are simply unavoidable and mandatory. Despite how one tries to live ideally and be a model citizen, there are times where one fall short from his/her responsibilities to pay taxes. Some simply ignore the payments due to financial concerns while others neglect such duties to focus on important circumstances. Whatever reasons they may have, settling tax debt requires certain processes.

Firstly, it best for the debtor to check on his/her previous tax returns just to double check on unseen deductions. Amending your tax return can mean lower tax payment. Second, read on the different IRS debt settlement program and choose on a program that suits your financial status. Third,decide whether to hire a profession or you can manage to settle IRS tax debt on your own.

When do you hire a professional or when is it okay to settle IRS debt on your own? Hiring or not is purely your prerogative. Nevertheless, it is recommended to hire a professional when you are dealing with a tax debt of $10,000 or more. You must make sure that the professional you hire is a certified public accountant, enrolled agent or a tax attorney. These professions are credited by the Internal Revenue Service as eligible to handle such problems.

You would also consider that fees charged by these tax experts. Some would have an hourly rates while others might have fixed rate for services rendered. See to it that the task done by these experts requires specialized skills and knowledge, offer to do the task on paper works and errands.

Lastly, remember when there is an opportunity to make money, most of the time, con artists and scammers will seized this chance to snatch your hard earned money. According to reports, fake tax companies guarantee results without prior knowledge of you tax debt situation, require amount of cash as deposit, pass you to different representatives, and does not a physical address. Always be on the look out for these signs.

Tips On Inheritance Planning

Once you get over the initial surprise of having been included in a will and you are now thinking of what to do with what has been bequeathed to you, there is bound to be a lot of confusion with so many ideas going through your head as well as others that will be coming from family and friends. It is important to give serious thought to your inheritance planning. Inheritance like all other privileges comes with its fair share of responsibility and you need to make the best of it. Here are a few tips that will help you as you plan for your inheritance.

Give yourself enough time. Do not rush yourself or accept to be rushed by others to make rash decisions concerning you inheritance. It is very likely that you were not expecting the money or property you have inherited and it is therefore important that you give enough time or you may end up making costly mistakes by rushing into things.

Another thing to avoid is giving too much information to many people as regards your inheritance. There will be people who may have a clue that you inherited some money or property but you do not need to give them the details. Not everyone means well and you could find yourself in trouble as a result of people you gave too much information misusing it.

It is also important to get yourself professional financial planning advice on how to manage your inheritance. There are lawyers and accountants who are well versed in inheritance planning and inheritance tax planning and they can competently help you design a plan that will see you benefit long term from your newly acquired wealth.

Make sure you appreciate whatever you get. Some people will look at what they have inherited as very little, once you take this line of thought it is very difficult to make any meaningful use of the little you have been given. You should be very grateful since there are many people who live their lives and never get to inherit anything.

Finally, make sure you enjoy your inheritance. This does not mean you should squander it on meaningless purchases, but remember to include something you enjoy into your inheritance planning. It may be a trip you have always wanted to take or a treat that you always wanted for you and your family. Whatever it may be just make sure that it does not take up the biggest portion of your inheritance, but it should be there.

Enhanced by Zemanta