Tax Return Tips for Students
If you’re a student who has decided to juggle a part-time job alongside your heavy course load, 2020 may be the first year that you are eligible to file taxes. Students who earn under a certain amount per year are not required to file taxes, but it could still be a good idea if federal income tax was withheld from your paychecks. This is hard-earned money that the IRS owes you! Once you have concluded that filing taxes will be a smart move for your financial security, deciding on how to spend that tax refund can be a daunting task. For students who are living paycheck to paycheck, it’s tempting to blow a tax refund or even put it all towards student loans. The key to spending a tax refund as a student is finding balance by investing in your future and current self. Take a look at these tax return tips for students and contribute your money from the IRS towards something worthwhile this school year.
Speak to a Financial Advisor
This may seem like a no-brainer, but speaking to a financial advisor can provide some thoughtful direction when trying to budget your tax refund. The best part? Many college campuses have them! Financial advisors and accountants can cost hundreds of dollars, emptying your pockets before you even get the chance to dip into that tax refund. Check into your university’s advisor program and see if you can get away with some advice at no charge.
Invest in Your Future: Give a Little to Get a Little
You’re already enrolled in classes at your college or university, but with so many online classes available nationwide, it’s possible to get ahead in your education. Consider putting your tax refund towards a summer or online class not covered by tuition. That way you can knock out a few credits on your own schedule. Investing in a new skill or hobby can contribute to some future income, too. By using your tax refund to pay for a certification class in subjects like personal training or computer coding, you’re investing in a side hustle that might pay off in the long run.
Upgrade Your Gadgets (Within Reason)
As a student, your most important tool (aside from your mind!) is a gadget that will allow you to get your work done efficiently. That means there is no room for a slow laptop or broken calculator. If it’s time to upgrade some technology to further enhance your learning experience, use your tax refund towards that. Refurbished computers and electronics can be found with a simple Google search and many campus bookstores sell second-hand equipment so their students don’t have to break the bank. This goes for textbooks, too! Hardback texts are oftentimes pricey, but way more reliable than those sketchy PDFs found online.
Pay off Student Loans
If you’ve taken care of all credit card payments, student loans are likely your primary form of high-interest debt. We know, we know… student loan debt is already a dark cloud looming over your shoulders. Do you really have to spend this extra chunk of change on that? While you may feel enslaved to a standard repayment plan for the next 10 or so years, no rule states you have to take that long to pay off your debt. In addition to cutting down your overall debt, by making payments in advance you’re reducing the amount of interest you might owe in the future.
Open an Emergency Fund
So you just purchased a brand spanking new laptop and are on track with paying off student loans. Permission to blow your tax refund on a new wardrobe and snacks, right? Not just yet! By setting up a high-yield savings account, you’ll be prepping for future unexpected costs that may fall into your lap this upcoming year. Things like car trouble, medical co-pays and broken appliances can all put a dent in your checking account, so it’s smart to have a hefty cushion as a backup.
Budgeting your tax refund can be hard, and it’s even more difficult for students who are striving to make ends meet. At Members 1st of NJ FCU, you can easily manage your student loans with no origination fee and competitive interest rates. Interested in setting up a checking or savings account? You can expect zero service charges and convenient access tools that make managing your finances a piece of cake.