What the Extended Tax Deadline Means For You

Amid the COVID-19 outbreak, the Treasury Department and Internal Revenue Service (IRS) announced that the tax deadline is being extended from April 15, 2020 to July 15, 2020.1 This allows three additional months for taxpayers to file and pay their taxes, interest free and penalty free. While the extension brings a bit of good news and some relief to taxpayers, it may also not be a time sit around and wait.

Consider this–a tax refund can be the largest paycheck of the year for many with 72% of taxpayers receiving a refund close to $3,000 last year.2 Given more time to file may sound nice, but some money in your pockets during a critical time such as this can be extremely beneficial.

During social distancing and lockdowns, your tax refund can be used to:
• Purchase essentials such as groceries and medication
• Cover bills if you’re on unpaid leave of absence or recently unemployed
• Pay down any high-interest debt
• Boost your emergency fund
• Contribute to your retirement accounts

No matter the speed bumps and potholes that may arise in life, we want you to remain confident throughout your financial journey. Your refund is money that you’ve worked hard to earn. Now, let it work hard for you.

Three Smart Ways to Use Your Tax Refund

The federal tax deadline of Monday, April 15 is just around the corner, and you may be excited about the possibility of receiving a sizable refund. After filing taxes, most refunds will be issued within three weeks. If you’re receiving one this year, it’s the perfect opportunity to improve your financial situation. Data from the IRS shows the average tax refund in 2019 is $3,143.1 Whether you’ll receive less or more, this windfall could make a difference in your future. Consider these three smart uses:

1. Ramp up your emergency fund. Use your refund to build or replenish your emergency savings. You’ll achieve a better sense of financial security by having a cushion for those unexpected events, such as a job loss, illness, an accident, or a natural disaster.
2. Pay off high-interest debt. Have a credit card or loan balance that seems to never go down? By significantly lowering your debt, you’ll be left with paying less interest and having smaller payments. And soon enough, you’ll be moments closer to debt freedom.
3. Contribute to your retirement account. Investing your refund in a retirement account such as a 401(k), traditional IRA, or Roth IRA with potential tax advantages can help create a better position for you in your golden years. In addition, you might be able to deduct some of the contributions on next year’s return.

Whether you spend it or save it, be sure to use it wisely. Remember it’s not free money, it’s money that you’ve earned. Need advice or further guidance on how to best leverage your refund?