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Now that the IRS has started accepting returns and distributing tax refunds, many of you are receiving large sums of money. If you’re not careful, you can easily sweep this money into your regular spending, earning several hundred to several thousand dollars worth of “extra” income and having nothing to show for it – it’s lifestyle inflation at its finest!
First, remember that it’s not really extra – you earned it over the course of the year and simply overpaid in taxes. To avoid the same issue next year, adjust your withholding using a W-4 form.
Secondly, do your best to separate the refund right away – if you’re not immediately sure what you want to do with it, park it in an ING or SmartyPig account until you decide. If you need some ideas, keep reading!
How will you spend your tax refund?