Tax refund advice: Save some, spend some

COLUMBIA, Mo. –Refunds are ready to roll out. Uncle Sam sends Missourians an average income tax refund of $2,612, according to IRS data.

Hold on to some of that cash, says Andrew Zumwalt, personal finance specialist with University of Missouri Extension. Refunds are wages you earn throughout the year and should be thought of as hard-earned money rather than found money, Zumwalt says.

For the wise, a refund windfall is a chance to stash some of the cash in an emergency fund. Use some to pay down high-interest debt.

Zumwalt heads MU Extension’s VITA (Volunteer Income Tax Assistance) program, which offers free tax preparation throughout the state for qualified individuals and households.

Zumwalt offers these financial tips:

• Save part of your refund for emergencies. Save $500-$1,000 or more for unexpected repairs or medical bills that could create a financial crisis and add to your debt.

• Jump-start a savings account by using part of your refund. Have part of your refund electronically deposited into a savings account. You can have your refund direct-deposited into more than one account using IRS Form 8888. Set up a savings account before you file your taxes if you don’t already have one; have your account and routing number with you when you go to your tax filer.

• Pay down high-interest debt with some of your refund. If you have more than one credit card, pay off the card with the highest interest first.

For information about the VITA tax program in Missouri, go to extension.missouri.edu/hes/taxed/vitasites.htm.

MU Extension offers numerous financial education workshops throughout the year. For information on resources in your county, go to extension.missouri.edu/hes/financial.