Most husbands and wives agree that taxes are a necessary evil but that's where the agreement often ends. When the tax refund arrives what each person wants to do with the new influx of cash runs the gamut. This can create tension in your relationship, because each of you view money differently. One spouse may want to spend it effortlessly, while the other may want to store it up like a squirrel hiding nuts.
If you and your partner don't always see eye-to-eye on money, we recommend these three things to consider before your tax refund arrives.
1. Pay it forward! Use your tax refund or a portion of it, to invest in your relationship and your future together.
Couples cite "money" as the number one reason for divorce. Think of this one-time payment as insurance against that and use it to invest in your relationship. Consider spending your refund on a marriage retreat, a gym membership, a day at the spa, matching motorcycles, a hot-air balloon ride or a romantic getaway just for the two of you. Dream up a good variety so everyone can anticipate something fun in store.
Paying it forward could also be an opportunity for you to contribute to a charity or multiple causes important to both you. Your single gift of philanthropy could change the lives of countless others. Anne Frank said, "No one has ever become poor by giving."
These "investments" you make together will pay daily dividends in your personal relationship and potentially others' lives as well.
2. Take it back! With an average tax return of $3,000, what would your budget look like if you had a portion of your refund amount back to use each month during the year? Your household certainly needs that money for monthly expenses more than Washington does. If your withholdings are not adjusted just right, your tax refund is really the amount you give the government to use ... tax-free.
Figuring the exact amount of withholding can be tricky, especially if you have significant changes to your income or deductions but the IRS offers a handy Withholding Calculator on their website.
Consult with a tax preparer or CPA to see how you might adjust your withholdings for next year. The time you invest now could improve your budget for next year. Keep reading ...
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