Did you get a tax refund this year? I’m sure you’ve already heard that you should not be 
giving the government an interest-free loan. Maybe you’ve decided to change things for 2012 by revising your withholding or estimated tax payments to reduce the amount of next year’s refund — or maybe you haven’t. Financial planning means creating effective strategies that work for you — which can include forcing yourself to save by overpaying your income tax during the year. The more important consideration is what you do with the money you get back. Here are ideas for making the most of your refund:
* Save. The unexpected happens. The question is, how do you pay the resulting bills? Parking part of your refund in a readily accessible location, such as a bank checking, savings, or money market account, will help you weather short-term, temporary setbacks without incurring penalties or transaction fees.
* Spend. Spending your refund wisely can get your finances in shape and pay off over the long run. For instance, home improvements like energy-efficient windows or a new water heater may result in lower electric and insurance bills. Refinancing your mortgage reduces your monthly cash outlay, freeing money for investing or saving. Ditto for paying down high-interest credit cards — so long as you resist the urge to reload them.
* Self-invest. Using your refund to refresh your current career-related skills or to learn new ones can provide a double benefit: more employment opportunities and tax savings. Unsure of your job security? Put your refund to work by financing a home-based business and creating a second stream of income. Give us a call (970) 482-6947 and we are happy to give you advice on tax withholding, estimated tax payments, or what to do with that tax refund.