Do you have a plan for spending any tax returns you get this year? How do you use that money?

My plan is to build up my savings account and set some aside towards the purchase of a home.

hello sir,

The end of June is only a short time away and in Australia, like many countries, this means time to file a personal income tax return. To assist with personal tax returns, the Australian Tax Office (ATO) has, for a number of years now, been providing a free online tax return tool, dubbed eTax.

Read more at Suite101: Free Online Tax Return - How to do Your Tax Return Online http://personal-tax-planning.suite101.com/article.cfm/free-online-tax-return—-how-to-do-your-tax-return-online#ixzz0lGAOcJGS

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In an astonishing power grab, the Internal Revenue Service wants to license all who prepare returns for taxpayers. This means that Uncle Oscar couldn’t help his nephew prepare his income tax return unless a Washington bureaucrat grants a license.H&R Block and the National Association of Tax Professionals (NATP) are supporting the effort by IRS Commissioner Douglas Shulman for selfish reasons: If Uncle Oscar can’t help, his nephew must pay a “licensed” preparer.Shulman said in testimony before the House Ways and Means Committee that he expects to make his recommendations to Treasury Secretary Timothy Geithner and President Obama by the end of the year.

First of all, set aside a portion of the refund check, perhaps 20 percent, for your own immediate personal pleasure. Spend some time planning how you will spend this small windfall, and really enjoy the process. Buy an experience that you will always remember or something beautiful or useful for yourself.

Then, get down to business.

If you have credit card debt, this tax refund can be just the thing you need to jump start a debt reduction plan. Use your refund check to pay down the credit card with the highest interest rate. At the same time, sit down and create a plan to reduce your debt. This is a wonderful time to discuss debt and savings with your entire family, and teach your children the value of planning for the future and financial independence. (If you’re in debt and looking to get out, check out our 21-Day Debt Makeover).

If you are not in debt, you can use this money to set up a cash emergency fund, a special fund of cash set aside for genuine emergencies. This is not the money to tap when you need a new couch or you’re dying for a weekend away. This is money for a time when you need to pay for something you or your family really needs. The security provided by this treasure-trove of money is invaluable.

If you already have money set aside, use the refund to increase your retirement plan contribution at work. Depending on your salary and your company’s policies, you can increase your contribution by the entire refund for one paycheck and then decrease it for the next, or slowly set aside an amount equivalent to the tax refund you received.

Getting a tax refund is something that we can look forward to. It’s nice knowing the government owes you money after you’ve paid your taxes, because we may need those extra dollars for perhaps several different reasons. However, there are some cases in which you can lose that tax refund to your creditors.