Posts Tagged ‘Tax refund’

Tax Season: Ways You Can Spend Your Returns

Wednesday, April 14th, 2010

For most people, tax season can be a dreadful time. The new changes in the tax code and trying to make sure you have all of the essential items such as important documents and receipts can make the tax filing process very frustrating and time consuming. Most experts say that you can make the filing process much easier if you take the time to prepare instead of waiting until the very last minute. However, there is a light at the end of the tunnel. The average tax refund that Canadians receive is approximately $1,400.

Many Canadians will use that money to go on a holiday or have a shopping spree; however, there are many other ways that you can put your tax refund to use. Your tax refund can help you get ahead with your personal finances.

Here are several, useful things you can do with your tax refund.

1. Invest it Why not put the money you just got back and invest it on your own future? Invest it into your mutual funds, or put it away into your retirement fund. Grow a nest egg that you can enjoy when you finally go into your well deserved retirement.

2. Pay Off Debts Owing money to creditors can bring a lot of unwanted stress and pressure. Use your tax refund to pay off debts and get your finances back in order. Even if the money isn’t enough to clear all your debts, the money will reduce the principal and bring you that much closer to being debt free.

3. University Fund It’s never too early to start saving for your children’s education. Put it away into an RESP. With the rising costs of tuition, this may be one of the smartest moves you’re doing to secure a bright future for them. In addition, it’s a valuable lesson for your kids to plan ahead. As a result, when they find out they have a nice fund waiting for them to complete their education; they can focus on what’s important, learning.

4. Home Improvement Have you been waiting for the right time to do that perfect renovation? Why not spend your return on improving your home? You can renovate your kitchen, change the bathroom, even change the overall theme of your house! This is a great way to breathe new life into your home, while increasing its value.

5. Save it. If all else fails, you can always first put it into a savings account, and worry about it later. At the very least, it will still earn some interest (even if it is at historical lows), and in the long run, compound interest will take its effect.

The number one reason why people file their taxes in the first place is so they can get their tax returns. Use the windfall to pay off some debt, save it for the future, or even dabble in some investing. This money is yours to spend as you will; however, using it wisely can help towards gaining greater financial stability.

Adriana Noton is a freelance writer who writes on a variety of financial topics including personal budgeting and debt consolidation. For more information about personal finance and credit help, ConsolidatedCredit.ca is a tremendous resource on the topic for Canadians.

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Will I Still Get My Tax Refund If I File For Chapter 7?

Tuesday, March 16th, 2010

In cases where you may be expecting a tax refund, that revenue could quite possibly be converted into property belonging to the bankruptcy estate. On the other hand, there are many ways to shield a person’s refund if you are anticipating one.

Firstly, money which the federal government owes you for one’s tax refund may perhaps be claimed as exempt property. Illinois has opted out of the national bankruptcy exemptions and makes use of as an alternative its own exemptions. The Illinois law allows a “wildcard” exemption of up to $4,000 total for any personal assets apart from wages. In cases where you lack any other personal property that you really may prefer to claim as exempt, or perhaps in the event that that property’s true worth is actually below $4,000, your refund could possibly be exempted according to the “wildcard” exemption.

Secondly, you can actually apply your reimbursement toward next year’s taxes. When you file your return, one might choose to use tax overpayments for your tax liability for a year later. Should you make this particular decision, you cannot change your mind – it is an irrevocable election. Since you are unable to revoke the election to apply your repayment for the next year’s taxes, then you no longer possess any right to a refund. As you would no longer possess a right to a refund, you don’t have property interest to end up being part of the bankruptcy estate.

Additionally you can prevent your refund from becoming property connected with the bankruptcy estate by simply waiting to file till once you receive your refund. Once you have received your tax refund, you more than likely could spend this money on your attorney’s fees or consumable necessities. These are legitimate expenses to spend your tax refund money on.

It is significant to note that tax credits may be kept from the bankruptcy estate for quite a few good reasons as well. One argument could be that the right to a tax credit can not be identified before the end of the tax year. In the event the right to a credit has not determined, there is no interest in the credit that can become the property of the bankruptcy estate. Assuming you have not filed your tax return yet, an argument might be made that there’s no interest in the credit as well. Furthermore, the earned income tax credit may be entitled to exemption as a public assistance benefit.

John Kunes is on a mission to be the bankruptcy lawyer Chicago can count on. Get answers to your questions about bankruptcy in Chicago at John’s bankruptcy blog, ChicagolandBankruptcyHelp.com. Don’t reprint this exact article. Instead, reprint a free unique content version of this same article.

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