Split It! Have a Plan for Your Refund
Have a plan in mind when you file your taxes. If you’re due a refund, go ahead and split it up into multiple accounts (think checking, saving, and retirement or college saving account) using the 30-40-30 plan:
- 30% of your refund to pay off outstanding debts or catch up on bills
- 40% of your refund to pay for current expenses, needs, or wants
- 30% of your refund to establish or build up savings. This could be an emergency fund (start with $500) or longer-term like retirement or a large purchase like a home.
Use IRS Form 8888 to split your refund in up to THREE accounts. Form 8888 can be accessed with your tax preparer during your tax preparation appointment. It’s easy to use, so don’t forget to ask if your preparer doesn’t suggest it.
PRO TIP: Add the account and routing numbers or blank checks of the accounts you are using for the 30-40-30 plan to your tax documents folder so you’re ready to fill in Form 8888 before your complete your tax return.
It’s our favorite way to save, automatically and through direct deposit.
- Written by Lila Quintiliani
- Category: Blog
- Published: 30 January 2020