NEW YORK (CBSNewYork) — Tax season is underway.
If you’re getting a refund this year, what should you do with it? And how should you prepare for next year?
As CBS2’s Alice Gainer explained, people do all sorts of things with their tax refunds.
“Usually try to pay my student or save and invest it,” one person said.
“Sometimes I take a vacation, pay bills, and life things, take care of my dog,” Tiffany Mahaud said.
Anil Melwani is a certified public accountant. He said once you get your refund, put it in the bank for a little bit.
“Project how you’re going to do over the next year or two, and see maybe you should put it into an IRA or 401K, or 529 plan for your child,” he said.
He said to get the best refund, make sure you’re organized with receipts. Many credit card companies provide year end statements to make deductions easier.
“Certain types of medical expenses, health insurance premium, unreimbursed job expenses, tax prep fees,” Melwani said.
What about looking forward to next year with the tax changes ahead?
Jean Johnson is with H&R Block.
“In the upcoming weeks, people will begin to see changes in their withholding in their paychecks. That’s the most immediate change they will see right now,” she said. “The best thing they can do right now is look at their W4. Their W4 determines the amount being withheld, so now si the time to look at it. Some of them will think their income tax refund will be larger for 2018, so do they want that money now versus a bigger refund later?”
Melwani said things may be different for most New Yorkers.
“Because we live in a high tax state like New York, you may not be paying less taxes this year. Many people in New York will be paying a little more this year because of that loss of that state and local tax deduction,” he said. “So while the brackets are coming down, a lot of deductions are going away.”
Melwani stressed that people should be conservative, and perhaps increase their withholding because they may not be getting a bigger refund.
The IRS said it issues most refunds in less than 21 calendar days.