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With the tax deadline coming up, many people have already finished their taxes or are just about to do so. A person can feel an awful lot of relief after finishing filing their taxes; it can feel good to be done with the process for yet another year. In the midst of such relief though, it can be important to remember that getting one’s taxes done doesn’t necessarily mean one is free from thinking of tax-related matters for awhile. Important tax-connected decisions can come up for a person after filing.
One is how to spend a tax refund. This is a decision that comes before many Americans in the wake of tax season.
Tax refunds can get pretty big in size. So, how a person chooses to spend their refund could be quite impactful and can be something worth giving some careful thought.
How do most Americans use their tax refund? A recent survey indicates that, this year, taxpayers have pretty practical plans for their refund.
Here are some of the more common plans for what to do with a tax refund among the survey respondents (and what portion of the refund-expecting respondents cited having that plan):
- Saving or investing it (a little over one-third).
- Using it on necessities (29 percent).
- Using it to make debt payments (27 percent).
Meanwhile, planning to use their refund to splurge was rather uncommon among the refund-expecting respondents, with only 6 percent reporting that they would use a refund this way.
Now, sometimes, decisions of a less pleasant variety come up for a person after they have filed their taxes. For example, they might end up facing allegations from the Internal Revenue Service that something was wrong with their tax filing and dealing with things like being audited, being issued a tax penalty or being assessed a tax debt by the IRS. Key decisions on how to respond can come up for a taxpayer in such situations. What decisions the taxpayer ends up making on this front could have long-lasting ramifications. So, when tax troubles come up after filing their taxes, a taxpayer may want to promptly meet with a tax lawyer for guidance and advice.
Source: 24/7 Wall St., “How Americans Plan to Spend Their Tax Refunds,” Paul Ausick, March 6, 2017