Tax season can stir up a mix of emotions: excitement when a refund shows up or stress if you owe money. The good news? With a little preparation and smart planning, you can use this time to strengthen your financial foundation and make choices that benefit you throughout the year.
Whether you are a seasoned filer or this is your first time navigating your return, here is how to approach your refund or tax bill with confidence.
Got a Refund? Here’s How to Make It Count
Instead of letting a refund disappear into everyday spending, consider ways to put it to work for your financial goals:
- Fund Your Emergency Savings: Life doesn’t always go as planned, and unexpected costs like car repairs, medical bills, or a job change can pop up when you least expect them. Adding your refund to an emergency fund makes you financially resilient and helps you avoid high-interest debt later.
- Pay Down High-Interest Debt: Using part of your refund to pay down debt like credit card balances or personal loans can save significant money in interest over time. It is one of the best ways to improve your monthly cash flow.
- Contribute to Long-Term Savings: Consider putting some of your refund into savings goals like retirement, a down payment on a home, or a dedicated travel/emergency account. Even small, regular contributions to these accounts can grow over time.
- Plan With Tax Tools and Education: Our online Wellness Library has guides and planning tools to help you understand how decisions, like adjusting withholdings, can impact your taxes next year. Using these resources now might delay owing money next season or help you optimize future refunds.
Owe Money This Tax Season? Smart Steps to Take
Getting a tax bill can be stressful, but the way you handle it can make a big difference:
- Budget for the Payment: Set aside the funds now so it does not disrupt your other financial goals. This might mean tightening discretionary spending this month to avoid dipping into savings.
- Explore IRS Payment Options: If you cannot pay in full by the deadline, the IRS offers payment plans that let you pay what you owe over time. It is usually better than incurring penalties or interest.
- Check Your Withholding for Next Year: If you owe significantly each year, it might mean too little tax is being taken from your paychecks. Adjusting your withholding now can help you avoid a large bill next time. Check out this Federal Income Tax Withholdings Calculator (click here) that can help you understand if your employer is withholding the right amount.
Resources & Support from Dover-Phila Federal Credit Union
At Dover-Phila Federal Credit Union, your financial wellbeing is a priority. As a member, you have access to:
- Free financial education tools like our online Wellness Library with articles, calculators, and activities to help you understand taxes and planning basics.
- Certified financial counseling, where you can get personalized guidance on budgeting, debt management, and long-term planning.
- Ongoing workshops and programs to help build confidence in your money decisions.
No matter where you are in your financial journey, we are here to help you make informed, confident decisions this tax season and every season.