DARKE COUNTY - Some area residents have already seen their tax refund checks, others are waiting with anticipation. Some are figuring out how to pay what they owe the IRS, while many will wait until the April 15 deadline to even prepare their taxes.
There’s no doubt that a tax refund can be an economic windfall for some, said Joel Sink, adjunct assistant professor of economic education at Wright State University and program director for the Darke Economic Foundation; it’s really more of a question of how people will spend their refund money, which according to Sink, is their money that they overpaid, allowing the government to use that money for free for the year, or credits for childcare, education and numerous others.
“Ideally, you want just the right amount taken out of your check each pay period – so come tax time you neither owe nor get anything back,” Sink noted. “But for those who do have extra withheld, and like to get that check back – it does provide a nice bonus, because it’s money that’s out of sight, out of mind. We get that nice refund check back, and then we all have decisions to make.”
Sink said that individuals have an average propensity, either to spend or to save; if someone typically spends 90 percent of their paycheck and saves 10 percent, Sink said they’re likely to do the same with a tax refund check.
“The most important thing to get out there is that just because you get a refund check, that doesn’t mean you should go out and blow it – be wise with your money,” Sink advised. “If you have debt, pay that down a little. Save some for a rainy day. Apply it toward next year’s taxes if you need to do that. But also, there’s nothing wrong with spending some of it with our local retailers, just be a wise consumer.”
According to Take Charge America, a national non-profit credit counseling agency, refund checks present a “unique opportunity” to use that windfall money to improve their families’ “financial well-being now and in the long term.”
Some of the tips offered by Take Charge America include paying off debt; paying down mortgage; boosting savings accounts; adjusting withholding to allow the appropriate amount to be taken out throughout the year; and using direct deposit to direct the money no longer being withheld from each paycheck into a savings account.
Some people prefer to have their federal taxes withheld so that they do get that check in the spring, Sink stated.
“The advice I would give is to carefully consider what to do with a refund check,” Sink said. “You can spend it all very quickly, that’s easy to do and then it’s gone. The wise thing, like we would tell anyone with a windfall, is to put a little away, save some, but also, if you have the means to do it, spend a little…Certainly if people get a nice tax refund sometime in the spring it can be a real advantage to local retailers, too.”
Several Darke County residents said they plan to use their refunds for practical things like home improvements, clothes for the children, and paying bills.
“My husband Jim and I pay all that we can at tax time so we don’t have to worry the rest of the year; we pay car insurance at a yearly rate, yearly vet visit, and then ignored home or car repairs,” said Crystal Hill of Greenville. “If any is left, we’ll get a special gift to ourselves.”
Others use their refunds for vacations, or in Jon and Danielle Hayes’ case, a honeymoon following a vow renewal ceremony, since they didn’t have a big ceremony when they married five years ago.
“When we got married, going on five years ago, we weren’t able to have our dream wedding, or our dream honeymoon. So, this year, for our five-year anniversary, we are celebrating with a vow renewal ceremony and a great get-away honeymoon,” Danielle stated.
Along with a vow renewal ceremony and honeymoon, the couple plans to use their refund for home repairs, and like many parents of young children, clothes for their two daughters. As Sink mentioned, it’s a personal choice for each person receiving a refund, and one that people should consider carefully.
“Some take a vacation, some buy that big screen TV that they’ve been thinking about for a long time. What most people will do is a combination; save some, spend some. We each have that propensity to save and to spend,” Sink said. “You can spend it all very quickly, that’s easy to do and then it’s gone. The wise thing, like we would tell anyone with a windfall, is to put a little away, save some, but also, if you have the means to do it, spend a little.”