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Frugal Friday: Tips for Tax Time

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Frugal Friday: Tips for Tax Time

Frugal Friday taxes

It’s Frugal Friday!  The time when we take a few moments to focus on tips and hints for frugal living.

It’s just over a month before Tax Day, so I thought it’s a good time to share this Frugal Friday post and take a look at some ideas for making the most of your tax situation.  First of all, make sure you file on time–Monday, April 18 is the deadline, and you’ll be hit with penalties if your taxes aren’t e-filed or postmarked by that date.  Late penalties are NOT frugal, so get things organized sooner rather than later to take care of your return.

For a fairly simple, straightforward return, many of the free online tax prep sites will be sufficient.  You can check out my post on DIY Taxes HERE.  It’s also free to do them yourself with the old paper-and-pencil method and mail them in.  E-filing returns gets you your refund quicker, but double-check any fees for e-filing to make sure it’s worthwhile.  Because our taxes are just a smidge more complicated than the free e-filing programs can handle, we’ve used H&R Block Deluxe Federal + State for the past several years, and it makes things about as simple as they can be!

Many people get excited about having a big refund, but truly that just means that Uncle Sam has had an interest-free loan of your money for the past year.  Ideally, it’s best to get just a small refund or come close to breaking even; this way you get to have that money throughout the year.  You also want to avoid owing too much at tax time, because you might be charged penalties for underpayment.  Consider adjusting how much you withhold for 2015 if you were way off so you’re ready for next year.

If you are getting a refund, here are a few ideas to use it to help you achieve some of your Frugal Living goals:

  • Pay off interest-bearing debt:  Carrying a balance on a credit card?  Have a car loan that could be paid off?  Consider using your refund to wipe out some debt, saving you both the monthly payment and the interest that’s charged each month!
  • Create an Emergency Fund:  We talked in more detail about setting up an Emergency Fund HERE.  Having money set aside for true emergencies helps you be prepared and not turn to high-interest credit cards when something unexpected comes along.
  • Home improvement projects: If credit card debt and your emergency fund are already taken care of, using your refund to add value to one of your greatest asssets (your home) is a great option
  • Save for vacation: Making plans for summer?  Set aside some money for special family memories (once again, after credit card debt and the emergency fund!)
  • Bank it toward a savings goal: Review your mid- to long-term financial goals.  Could your refund help you achieve one of them?

More than anything, it’s about being mindful of how you’ll use whatever chunk of change comes your way–if it just goes into your checking account, you may find it gone without much to show for it!  Try to make your refund work for you, as you continue on your path of frugal living and financial security.

How about you, Sisters and Misters?  Any other tips for tax time?  I’d love to hear some of your ideas in the comments or on Facebook.  Thanks for sharing!

If you’re just joining the Frugal Friday series, check out these other posts:

Megan has been frugal most of her life, but has been really honing her frugal skills as the chief home economist for her family of six, surviving and thriving on a single (teacher’s!) income.  If she can do it, you can too!

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