The Department of the Treasury, together with the Internal Revenue Service (IRS), extended the tax payment deadline to May 17, 2021. If you haven’t filed your 2020 return yet, don’t get complacent—three weeks is not a lot of time.
In this article we’ll share some tips to make the filing process easier and, above all, how to maximize the refund the government provides.
Get help, don’t leave it to the last minute
When you file on your own, it’s crucial to have all the paperwork at hand and organized to compute your income, deductions, and credits. This makes the difference between a smooth process and a tedious one.
But with the deadline looming, if you still have questions, now is the time to seek help. There are options for those who don’t want to spend. For example, the IRS online tool that is completely free. It’s called the Interactive Tax Assistant (ITA).
If you’re looking for an affordable tax service with Spanish-speaking experts, fill out this form. You’ll talk with real tax professionals who will prepare your return without you having to leave home.
Make the most of your refund wisely
We all enjoy receiving a government refund, especially when we didn’t expect it. However, it’s very common for our emotions to take over and to waste the money. But this is precisely what we should avoid. Think carefully about how that money can give you long-term peace of mind.
One idea is to use your refund to improve your financial habits: that push you need to reduce your debts and start thinking about your net worth. You have several options with Finhabits, and we’ll guide you to start from the app:
1. Open an emergency savings account that, in the face of any setback, helps you avoid sinking into endless debt. The goal is to have at least $1,000 saved in case you need funds to get you through a rough moment. Over time you should aim to grow that amount until you can cover 2-3 months of expenses if you lose your job.
2. A personal investment account. It’s one of the most popular options since the money you receive as a government refund can grow over time. This account operates with a diversified portfolio created by experts; you can start with any amount, and it even lets you schedule automatic deposits.
3. Retirement savings accounts. These can be a Roth IRA or a traditional IRA. Both accounts offer certain tax benefits depending on your personal situation. Consider opening one, as it’s also important to think about life after retirement.
So there you have it—don’t wait until the last minute to finish your tax filing, and if you’re looking to improve your financial habits, consider dedicating a portion of your 2020 refund to stock market investing or to building an emergency fund for retirement.
