7 Wise Ways to Use Your Tax Refund

 

​ Have you thought about what you might do with your tax refund?

According to the Internal Revenue Service, more than 70 percent of the nation’s taxpayers received a tax refund averaging nearly $3,000 in 2017 and will get a similar amount this year.

As Americans receive their refunds along with additional benefits coming from the Tax Cuts and Jobs Act passed in December, Victory State Bank is suggesting tax-refund recipients consider these seven tips from the American Bankers Association to help them use the money wisely:

 

1)      SAVE FOR EMERGENCIES

More than 60 percent of Americans are not prepared for unexpected expenses. You can prepare by opening or adding to a savings account that serves as an “emergency fund.” Ideally, it should hold about three-to-six months of living expenses in case of sudden financial hardships like losing your job or having to replace your car.

2)      PAY OFF DEBT

Pay down existing balances either by chipping away at loans with the highest interest rates or eliminating smaller debt first.

3)      SAVE FOR RETIREMENT, YOUR CHILD’S EDUCATION

      OR FUTURE HEALTH EXPENSES

Open or increase contributions to a tax-deferred savings plan like a 401(k) or an IRA. Your bank can help set up an IRA, while a 401(k) is employer-sponsored. Look into opening a tax-advantaged 529 education savings plan to ensure school expenses will be covered when your child reaches college age. Or save for future health expenses with tax-free dollars by investing in a Health Savings Account.

4)      PAY DOWN YOUR MORTGAGE OR STUDENT LOANS

Make an extra payment on your mortgage or student loans each year to save money on interest while reducing the term of your loans. Be sure to inform your lender that your extra payments should be applied to principal, not interest.

5)      INVEST SAFELY WITH U.S. SAVINGS BONDS

OR MUNICIPAL BONDS 

The U.S. Treasury allows for savings bond to be purchased using your tax refund for as little as $50. Savings bonds earn interest for a maximum of 30 years.

6)      INVEST IN YOUR CURRENT HOME

Use your refund to invest in home improvements that will pay you back in the long run by increasing the value of your home.  This can include small, cost-effective upgrades like energy-efficient appliances that will pay off in both the short and long term – and with tax credits (as long as Congress continues to renew the program). If you have more substantial renovations in mind, your bank can help with a home equity line of credit.

7)      DONATE TO CHARITY

The benefit is two-fold: Giving to charity will make a difference in your community, and you can also claim the tax deduction, if you itemize.

ABA also stressed the importance of lower-income workers filing a tax return—even if their income is too low to trigger any federal tax liability—in order to potentially claim the Earned Income Tax Credit (EITC).  Depending on a recipient’s income, marital status and number of children, the EITC can result in a refund of up to $6,318 to help them ensure financial security. 

For more tips and resources on a variety of personal finance topics such as mortgages, credit cards, protecting your identity and saving for college, visit aba.com/Consumers.

 

 

ABOUT VICTORY STATE BANK

 

VSB Bancorp, Inc. (OTCQX: VSBN) is the one-bank holding company for Victory State Bank. As Staten Island, N.Y.’s only community-based commercial bank, Victory State Bank operates five full-service locations on the Island, including the main office in the community of Great Kills and branches in West Brighton, St. George, Dongan Hills and Rosebank.

A planned sixth branch, to be situated in Meiers Corners, has received both regulatory and building department approvals.

For additional information, Victory State Bank may be reached at 718-979-1100, or visited online at www.VictoryStateBank.com.

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