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Tax Prep: Don’t Be Afraid!

Dec 10, 2020

by Carmen Gonzalez

 

Tax filing time can seem like a nightmare, but you can make it a little easier if you prepare ahead of time. From making a checklist on what you will need to keeping things organized throughout the year, filing your taxes can be easy if you prepare ahead of time. Taxes can seem like a foreign language; but if you research and ask the experts, you can file without worries…. Let us help! Below, Centric offers a few tips to help you out in the upcoming tax season.

 

When it is time to file your taxes, making a checklist of everything you will need can help the process go smoothly. A good place to start is listing out all of the documents that you will need to collect prior to filing. This will include documents from your employer, bank, daycare, church, etc. You can search online for specific lists of items that you will need according to your current life situation. Once you have your checklist in order, you can decide on how you want to file your taxes. You can choose to file on your own through online platforms and software or you can file with a CPA or tax filing business. There are pros and cons to both, but the best way to decide is evaluating the complexity of your taxes. If it seems overwhelming to file on your own, CPAs and local businesses are there to assist you. If you want someone to help you file your taxes but cannot afford to pay, there are programs in place to help you without cost.

 

After you have made your checklist and decided how you are going to file your taxes, you need to know how you want to receive your tax refund. While the goal is to break even when it comes to filing your taxes, if you are getting money back, you should be prepared with information on where you want your money sent. This is a great time to create a relationship with a financial institution like Centric. Some tax prepares will offer you a prepaid debit card that has hidden fees and limits that restrict access to your money. By depositing with a financial institution, you can avoid unnecessary fees or restrictions. At Centric, accounts can be opened up during business hours at any of our five locations or online 24/7 at MyCentric.org. You can use our routing number (found at the top of this page!) and your account number to have your refund deposited directly in to your Centric account. If you do not know your Centric account number, give us a call at 318-340-9656 and we will be happy to assist you!

 

One you have received your tax refund, the extra money can seem like a great reason to go on a shopping spree or buy the newest gadget. While treating yourself a little isn’t a bad thing, you can use your tax refund to get ahead on your budget or financial goals. The first thing you should do when you receive your tax refund is make sure that your emergency fund is established and has a balance of at least $1,000. If you set this money aside, you will be better prepared for any possible future problems that may pop up. After your emergency saving is funded, it’s a great idea to start using your tax refund to tackle debt.

 

When it comes to debt, sometimes deciding where to start to get rid of it can be overwhelming. Always start with your smallest debt, also known as the ‘Snowball’ method. If you can pay-off or considerably lower the balance of a loans or credit card, use your refund to make that payment. You can boost your monthly budget by paying off a debt or making an extra payment. When you start the process of paying off your debt, you begin a snowball process that push you towards being debt-free and allow you to achieve your financial dreams.

 

Lastly, if your savings and debt are under-control, we suggest spending your refund in ways that will help you throughout the year. Here are some ideas on ways to spend your tax refund and how they can help you in the long haul:

Save for a down payment.
Whether you are needing to get a new ride or are wanting to purchase a home, you tax refund provides a great opportunity to establish a down payment. A down payment can help you when you are trying to get approved and helps lower your monthly payments.

 

Buy non-perishable items.
If you stock up on items that won’t go bad, you can cut them from your monthly budget. Things like paper goods, school supplies, or your family’s favorite canned foods can be bought in bulk and saved for later.

Other items that you can buy ahead of time are seasonal clothes. Winter clothes are cheaper as the weather begins to warm up, and summer clothes are cheaper as school begins and it starts to cool off. If you buy these in advance, you can save a lot of money.

 

Invest in home-improvements and equipment.
You can use your tax refund to update your home appearance, switch to energy-efficient appliances, or maybe replace an item that is wearing out. Using you tax refund for any of these home improvements can help you boost your budget overtime.  By updating your home, you can increase the value. In addition, the switch to energy-efficient appliances can decrease your utility costs each month.

 

Tax season is something we all have to deal with, but it can be made a lot less scary when we are prepared ahead of time. When we feel more comfortable with taxes and the tax filing process, we can better decide how we can use this to improve our financial situations. Whether it is changing how you file or choosing to use your tax refund to boost your budget, you can allow this time to be a starting point for achieving you financial dreams. While Centric does not provide tax advice, we can help you with opening accounts, evaluating your credit and current budget, and so much more.

 

* Centric FCU does not give tax advice; please contact a financial advisor for more detailed information.


 

To learn more, check out our latest Podcast, Tax Filing Tips, with Billy Joiner, SVP Accounting/Finance at Centric FCU.

 

 

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