It’s officially tax season: Jan. 29 marked the first day you could file your tax return to the IRS.
“Before you file your taxes, you’ll need to collect all your 2017 tax documents. If you’re an employee, that means your W-2; if you’re a freelancer, you may have multiple 1099 forms,” Cole writes. “In some cases, you may have other statements, such as income earned from an interest-bearing savings account or interest paid on a loan, or even taxable bitcoin gains.”
But while some lucky employees might not have to wait for a refund — some companies have been handing out bonuses as a result of the tax overhaul — the question still remains: How should the money be allocated?
Here are some things you can do with any extra cash you receive from a tax return or a bonus.
Set up an emergency fund
Recent Bankrate research found that if someone was hit with a bill of $1,000 that wasn’t planned for (like “for an emergency room visit or car repair,”) 39 percent of Americans would have to use their savings to pay it off. Another 19 percent would “finance with credit card, pay off over time” and 13% would cut back how much they spent in other areas.
Take that as your cue: Use some of the money to start an emergency fund or as Bankrate suggests, do things like “automate” the process to put some away every month.