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overlay text " Tax Season: Getting a Refund or Owing" plus a partial view of a 1040 form

Tax Season: Getting a Refund or Owing

You’ve checked filing your taxes off your to-do list. With that out of the way, you’ll find yourself in one of two camps: Excitedly awaiting extra money in your account or curious as to how to pay what you owe.

EXPECTING A REFUND

If you’re on the other end of the spectrum and found yourself owing this year, there are several ways to prepare for filing your taxes next year.

  • Save. Save. Save. Adding your tax refund to savings is a great way to prepare for the year ahead. Whether that sum goes toward your emergency fund or is set aside for an upcoming expense, putting your refund to work as savings is a smart plan.
  • Pay down debt. While it’s not a vacation, paying down any outstanding debt — student loans, credit cards, etc. — is another good option. Lowering your debt now will reduce the amount you pay in interest over time, giving you more money to work with down the line.
  • Invest in a new vehicle. If you’ve been saving for a new car, adding your refund to the mix is a way to make reaching your goal happen that much faster. You’ll also benefit from the latest technology and safety features in your new ride.

PREPARING TO OWE

If you’re on the other end of the spectrum and found yourself owing this year, there are several ways to prepare for filing your taxes next year.

  • Estimate the Amount Early: You can use an online calculator to figure out a ballpark number of how much you’ll owe. From there, you’ll be able to determine a plan.
  • Adjust Accordingly: If your current budget doesn’t account for the additional taxes you’ll owe, explore opportunities to trim other expenses. It might require sacrifices in the short term, but it will certainly be worth it once your taxes are in the rearview. 
  • Get Ready: If you can, work with a tax professional to determine a way to plan for the new year and set yourself up for financial success.

No matter which camp you find yourself in, there’s a light at the end of the tunnel. And you can move forward with the confidence that you’re prepared for the road ahead.

 
Allison Scott
By Allison Scott, GM Financial

Allison Scott stays plugged in to all things electric cars-related, and likes to balance it out by sharing a budgeting tip or two. When she's not working, you'll find her jamming out to John Mayer, cracking "dad jokes" or cheering on the Dallas Stars.

 

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