The Money Coach
  • About
    • Meet Lynnette
    • Media Kit
  • Contact
  • Subscribe
  • QR Code
  • Books
  • Categories
  • Coaching
  • Hire Lynnette
  • Money Coach University™
  • The Money Coach Recommends™
No Result
View All Result
The Money Coach
  • About
    • Meet Lynnette
    • Media Kit
  • Contact
  • Subscribe
  • QR Code
No Result
View All Result
The Money Coach
No Result
View All Result

How Will You Spend Your Tax Refund Check?

Lynnette Khalfani-Cox, The Money Coach by Lynnette Khalfani-Cox, The Money Coach
in Taxes
Reading Time: 3 mins read
8
SHARES
130
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

 Once again, most Americans expect to get a tax refund check, and more than a third of them plan to spend some or all of it, according to Capital One Bank’s annual Taxes and Savings Survey.

But this is one year in which spending your refund check wisely – or foolishly – could have long-lasting ramifications that linger throughout 2013 and beyond.

The Capital One survey found that the vast majority of Americans (65%) don’t even calculate their tax refund or tax payment into their annual budget. This isn’t smart financial planning – especially when the IRS says the average refund check in 2013 will be nearly $3,000.

According to IRS data, the average federal tax refund in 2012 was $2,803. In total, there were more than 110 million income-tax refunds totaling $309.6 billion paid last year.

So what are people doing with all this money?

More than a third (35%) plan to spend all or part of their refund in 2013, according to Capital One’s survey.

Roughly one in four people (22%) say they’ll use their refund to pay down debt.

And only a total of one in five Americans (20%) will save or invest their tax refunds, including 16% who are planning to save and 4% who intend to invest the money.

Among those individuals who admitted that they’ll spend some or all of their tax refund in 2013, here’s a breakdown of what they’ll do with the funds:

·         30% plan to spend it on everyday expenses and necessities

·         23% plan to spend it on a vacation

·         16% plan to spend it on clothing and accessories

·         15% plan to spend it on an iPad, TV, smartphone or other electronics, and

·         16% plan to spend it on other major purchases

More cash in your pocket

For those of you looking forward to a shopping bonanza, a word of caution is in order before you splurge.

Remember that by saving a greater portion of your refund check – instead of blowing it – you’ll have more cash in your pocket to help tide you over in 2013. That means more money to pay bills, cover necessities like food and transportation costs, or deal with unexpected emergencies that may arise.

Already, most Americans need a little extra money because they’re feeling the pinch of the payroll tax holiday, which went away.

As a result, the average U.S. household is paying about $2,000 more in taxes this year than was paid in 2012. So prudent use of your federal income tax refund could offset the financial squeeze you may be experiencing due to the payroll tax.

“At a time when people are seeing smaller paychecks, now more than ever they should take a step back, evaluate their financial goals and consider saving their tax refund,” said Mickey Konson, Managing Vice President for Retail Banking at Capital One Bank. “People tend to think of their tax refund as free money or an annual bonus, which makes it very tempting to spend it right away, but remember, that refund is your own money – without added interest. Tax season is a great time to plan ahead, with an eye toward your financial goals.”

Eliminate your debts

Using your income check wisely could also help you achieve long-term objectives, like knocking out credit card debt or reducing student loans.

Those credit card bills may be lingering remnants from your holiday shopping or they may even be old balances that you’ve been carrying around for years. Likewise, your college debt may be years’ old and you’ve only been chipping away at it little by little, making minimum payments.

So pause for a moment and consider how a tax refund of about $3,000 could decrease your future financial stress by eliminating some of your outstanding bills – in 2013 and in years to come.

Besides, using a tax refund responsibly, and paying off debt is a move you’ll probably never regret. The same can’t be said, however, for going out and spending a refund check on luxury items or non-necessities.

If you do that, more likely than not, you’ll wind up kicking yourself and wondering just how and why you blew a $3,000 windfall – especially if you later have little or nothing to show for it.

How will you spend your tax refund check?

Tags: Capital One Surveytax refund
Previous Post

Where to Find Health Insurance Before COBRA Runs Out

Next Post

How to Get Off Your Financial Roller Coaster

Related Posts

Close up of lower left corner of Internal Revenue Service form 1099-MISC

A Really Simple Explanation of The IRS 1099 Form 

by Lynnette Khalfani-Cox, The Money Coach

As tax season approaches, many individuals and businesses gather their tax documents to file their tax returns. One of the necessary forms that individuals who earn income from non-employment sources need to file is the 1099 form. The 1099 form reports the amount of money an individual or business received...

Elderly Black American Man, African Person Working From Home

Why Do I Owe Taxes? I Am On Social Security

by Lynnette Khalfani-Cox, The Money Coach

Dear Lynnette, I was very upset yesterday to learn that my husband and I owe taxes ($1,100) for 2022. I am on Social Security and my husband is a supervisor at a motel here in Wyoming. I work part time and claimed zero as did my husband. I had an...

Breaking Down the ‘Penalties’ of Single Tax Filings

by Lynnette Khalfani-Cox, The Money Coach

With the new tax filing deadline looming, I stopped into Black News Channel’s “BNC Live” to discuss the upsides of joint filings and the disadvantages of filing solo. To kick off the segment, I detailed the built-in “penalties” that single individuals face in many aspects of life, including higher taxes,...

tax refund

Making the Most of Your Tax Refund

by Lynnette Khalfani-Cox, The Money Coach

With tax season upon us, millions of Americans are expecting sizable refunds.  But there’s no consensus on the best ways to put that money to work.  I stopped into PIX 11 in New York City to share some tips and strategies for maximizing the extra cash. I kicked off the segment with...

Car tax break tips

Skip the Luxury Car and Other Vehicle Tax Break Tips

by Guest Blogger

When it comes to purchasing your next vehicle, you could be leaving money on the table. The truth is that savings on your next car are not only dependent on special deals offered by the dealership. There are also savings to be had in the form of a tax break. Around...

uber and lyft

Tax Pros and Cons for Uber and Lyft Drivers

by Guest Blogger

While being a driver for Uber or Lyft is a great way to earn extra income, it can also come with many tax benefits and disadvantages. Getting an understanding of what can help you at tax time is essential so that you do not owe Uncle Sam more than what...

GOP Tax Plan Hurts The Middle Class

5 Horrible Things About the GOP Tax Plan

by Lynnette Khalfani-Cox, The Money Coach

President Donald Trump and the Republican Party are trying to rush a massive tax “reform” plan through Congress with as little as possible public hearings on the matter. It’s little wonder that the GOP doesn’t want too much scrutiny into this misguided, unfair tax proposal, because this tax plan –...

Load More

Popular Posts

  • Car repair

    What to Do If You Can’t Afford a Car Repair Bill

    1378 shares
    Share 551 Tweet 345
  • What to Do if Your Spouse Stole Money From You

    1166 shares
    Share 466 Tweet 292
  • What to Do If You Can’t Afford to Leave Your Spouse

    1104 shares
    Share 442 Tweet 276
  • Here’s Why I Pay My Kids For Good Grades (And Maybe You Should Too)

    1011 shares
    Share 404 Tweet 253
  • What Do All Those Strange Codes In My Credit Report Mean?

    815 shares
    Share 326 Tweet 204
  • Do This Now If Your Wages Were Not Reported

    745 shares
    Share 298 Tweet 186
  • How to Find Out if a Debt Collector is Licensed to Collect Your Debt

    724 shares
    Share 290 Tweet 181

All information on this blog is for educational purposes only. Lynnette Khalfani-Cox, The Money Coach, is not a certified financial planner, registered investment adviser, or attorney. If you need specialty financial, investment or legal advice, please consult the appropriate professional. Advertising Disclosure: This site may accept advertising, affiliate payments or other forms of compensation from companies mentioned in articles. This compensation may impact how and where products and companies appear on this site. AskTheMoneyCoach™ and Lynnette Khalfani-Cox, The Money Coach® are trademarks of TheMoneyCoach.net, LLC.

©2009-2023 TheMoneyCoach.net, LLC. All Rights Reserved.

RSS / Sitemap /Submit an Article / Privacy Policy / LynnetteKhalfaniCox.com

No Result
View All Result
  • Books
  • Categories
  • Contact Lynnette
  • Get Coaching
  • Hire Lynnette
  • Money Coach University™
  • The Money Coach Recommends™
  • Home
  • Subscribe to Newsletter
  • QR Code

©2009-2021 TheMoneyCoach.net, LLC. All Rights Reserved.

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In

Add New Playlist