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Tax Season: Getting a Refund or Owing

overlay text "Tax Season: Getting a Refund Or Owing" plus a partial view of a 1040 form March 6, 2019

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 expecting to get a tax refund this year, there are a few solid ways to allocate these funds.

  • 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 IN THE FUTURE

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.

By Allison Scott, GM Financial

GM Financial's Allison Scott is committed to steering people in the right financial direction. When she's not shifting gears at work, you can find her listening to John Mayer, cracking "dad jokes" or watching the Dallas Stars.

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