Page 5
February 2018
BUSINESS AND FINANCE
Y
WHAT SHOULD
YOU DO WITH
YOUR TAX
REFUND?
ou may not get
much of a thrill
from filing your
taxes, but the process
becomes
much
more
enjoyable if you’re expecting
a refund. So, if one is headed
your way, what should you
do with the money?
The answer depends
somewhat on the size of
the refund. For the 2017
tax year, the average refund
was about $2,760 – not a
fortune, but big enough to
make an impact in your life.
Suppose, for example, that
you invested this amount in
a tax-deferred vehicle, such
as a traditional IRA and then
did not add another penny
to it for 30 years. At the
end of that time, assuming
a hypothetical 7 percent
annual rate of return, you’d
have slightly more than
$21,000 – not enough, by
itself, to allow you to move
to a Caribbean island, but
still a nice addition to your
retirement income. (You
will need to pay taxes on
your withdrawals eventually,
unless the money was
invested in a Roth IRA, in
which case withdrawals are
tax-free, provided you meet
certain conditions.)
Of course, you don’t have
to wait 30 years before you
see any benefits from your
tax refund. If you did decide
to put a $2,760 tax refund
toward your IRA for 2018,
you’d already have reached
just over half the allowable
contribution limit of $5,500.
(If you’re 50 or older, the
limit is $6,500.) By getting
such a strong head start on
funding your IRA for the
year, you’ll give your money
more time to grow. Also, if
you’re going to “max out” on
your IRA, your large initial
payment will enable you
to put in smaller monthly
amounts than you might
need to contribute otherwise.
While using your refund
to help fund your IRA is a
good move, it’s not the only
one you can make. Here are
a few other possibilities:
Pay down some debt. At
some time or another, most
of us probably feel we’re
carrying too much debt. If
you can use your tax refund
to help reduce your monthly
debt payments, you’ll
improve your cash flow and
possibly have more money
available to invest for the
future.
Build an emergency fund.
If you needed a new furnace
or major car repair, or faced
any other large, unexpected
expense, how would you pay
for it? If you did not have the
cash readily available, you
might be forced to dip into
your long-term investments.
To help avoid this problem,
you could create an
emergency fund containing
three to six months’ worth
of living expenses, with
the money kept in a liquid,
low-risk account. Your tax
refund could help build your
emergency fund.
Look for other investment
opportunities. If you have
some gaps in your portfolio
or some opportunities
to improve your overall
diversification, you might
want to use your tax
refund to add some new
investments. The more
diversified your portfolio,
the stronger your defense
against market volatility
that might primarily affect
one particular asset class.
(However, diversification,
by itself, can’t protect against
all losses or guarantee
profits.)
Clearly, a tax refund gives
you a chance to improve
your overall financial
picture. So take your time,
evaluate your options and
use the money wisely.
PREPARATION FOR YOUR
TAX APPOINTMENT
Marketplace that will include
information needed to complete
your return.
•Keep your annual income
statements separate from your
other documents (e.g., W-2s from
employers, 1099s from banks,
stockbrokers, etc., and K-1s
from partnerships).
•Write down questions so you
don’t forget to ask them at the
appointment.
•Make sure you have social
security numbers for all your
dependents.
•Compare deductions from
last year with your records for
here
to
Begin? this year.
Preparation for your
•Collect any other documents
tax
appointment
should begin in January. Right and financial papers that you’re
after the New Year, set up a safe puzzled about.
storage location, such as a file
Accuracy Even for Details -
drawer, cupboard, or safe. As you
receive pertinent records, file them To ensure the greatest accuracy
right away, before you forget or possible in all detail on your return,
lose them. Make this a habit, and make sure you review personal
you’ll find your job a lot easier data. Check name(s), address(es),
on your appointment date. Other social security number(s) and
general suggestions to prepare for occupation(s) on last year’s return.
Note any changes for this year.
your appointment include:
Although your telephone numbers
and e-mail address aren’t required
•Segregate your records on your return, they are always
according to income and expense helpful should questions occur
during return preparation.
categories.
by Nicole Butler-Davis
W
•Call attention to any foreign
bank account, foreign financial
account, or foreign trust in
which you have an ownership
interest, signature authority, or
controlling stake.
•If you acquired your health
insurance through a government
Marketplace you will receive
Form 1095-A, issued by the
Jason Witcher
Financial Advisor
Edward Jones
its members accountable for
their work actions.
FULL-TIME OR PART-
TIME AGENT
when they are
trying to
make
an
offer or accept an offer on
their client’s behalf and the
other agent is not responsive
or slow to return calls.
Deon’s Do’s & Don’ts
2.Part-timers
often
lack important market
knowledge. It’s not hard
to see how this can be
disastrous when pricing a
house for sale or bidding for
a contract to purchase.
by Deon Cannon
T
here will always
be debates about
hiring a full-time
real estate agent or one
who
works
part-time.
While there may be some
significant reasons you
want to hire a part-time
agent think about some of
the following questions that
really come down to just a
few key issues, which I will
summarize:
1.Today’s real estate
market is truly a 24/7
business. Even agents
working full-time struggle
with the time pressures. If
your agent is occupied with
other
income-generating
work, you will miss offer
opportunities when they are
unable to respond to a call
from another agent. And
most agents are not pleased
3.Connections
are
incredibly important in
real estate transactions.
Oftentimes,
part-time
agents are lacking those
ties to those who can best
help when it’s needed. A
REALTOR® has like