Hello Workwell

Hello Tax Season

LearnAlyssa Davis
Photo by Raw Pixel on Unsplash

Photo by Raw Pixel on Unsplash

“The difference between death and taxes is death doesn't get worse every time Congress meets.” – Will Rogers

Get Your Billions Back America

Tax season is upon us. If you didn’t know that, you’re either hiding under a rock or not from the United States so welcome. We hope this means that you’re getting a refund from Uncle Sam. If so, here’s what you should do with that refund money:

  1. Pay off any outstanding debt. As tempting as it may be to go out for drinks or splurge on a new boat because you all the sudden have the “extra” money, refrain. Pay off what you can with what you have because the more you can pay down the principle, the less you’re spending on interest. Economics 101. We know you know this. Friendly reminders are always helpful.

  2. Put that money away. Try to stash 30% of your tax refund into your savings account. The IRS allows you to split your money into three separate accounts if you so desire. Use that to your advantage. If you can’t see it, you won’t be tempted to spend it.

  3. Try Acorns. Invest your spare change (or some of your tax refund) with this easy to use app, perfect if you’re a stock market newbie or aren’t sure where to invest your money. Acorns does all the work for you while you sit back and watch your money grow.

  4. With what’s left of your refund, make smart purchases. Use a couple hundred to buy a Trader Joe’s or gas gift card as a present to your future self. Enjoy a day of relaxation with a yoga retreat or a massage. Spend a little extra on someone at the office to show your appreciation. Don’t go crazy. A $2000 refund shouldn’t disappear in a day.

If you owe this year, don’t fret. A few tips from those of us (me) who have been there, done that, and lived to tell the tale:

  1. Double check your work. If you’ve decided to do your taxes yourself and have any form of complicated tax forms, your calculated refund could be incorrect. There are hundreds of write-offs you could be missing that an accountant will see that you may not know about. Trust me, I know. I went from owing $7000 to getting a refund. Accountants exist for a reason. Find one you trust and use them. They’re worth the few hundred bucks.

  2. Request an extension. You can get a short-term extension of up to 120 days to pay off your full balance, a great fee-free option if you need a short time to get your funds together. You can also get a hardship extension. If you qualify by IRS standards, then you can get a longer-term extension to pay your taxes off, with 3% interest.

  3. Set up an installment agreement. If you need more than 120 days and don’t qualify for a hardship extension, this is a solid option. Complete an online payment agreement and reduce your unpaid balance penalty to .25% per month, plus 3% interest — not a bad deal.

  4. Borrow from your 401k. If you have a 401k, you may be eligible to take from it to pay off the IRS. Check with your plan administrator.

  5. Plan ahead. 2019 is a new year. Check what you currently claim with your employer and make adjustments as necessary. If you freelance, set aside 30% of every check so that you can have the money for 2020. Remember to keep receipts of everything that you can write off so that in 2020, you have a full list of write-offs for your accountant and aren’t missing out on any piece of your refund.

Good luck this tax season. We’re right there with you! Have more tips and tricks for making it through this time of year? Shoot us an email at team@helloworkwell.com