First Person: I’m Looking Forward to My Tax Refund

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Tax season has officially started. My tax return forms have been steadily arriving in the mail. I have been carefully putting the W-2s and 1099s in a safe place so that I am ready to file our tax return. I'm also looking through receipts, DMV documents and bank statements to make sure we are prepared. We typically file early so that we receive our tax refund in early March. As usual, I'm looking forward to seeing the extra money in my bank account.

Deductions

With the birth of our son, we now have two children. This means we can claim two dependents. For each dependent, we can lower our taxable income by $3,800. In addition, the Child Tax Credit allows us to "claim up to $1,000 for each child." With school costs, food and diapers, our children cost us about $1000 a month. Thus, our tax refund should help cover a small percentage of the cost to raise our children. Along with receiving money for our children, we will also take advantage of the deductions for educators. My husband is a high school teacher and can take an above-the-line deduction of up to $250. This helps make up for any supplies my husband has purchased for his classroom. Charitable donations and interest on our mortgage are the two other big deductions we will be taking.

Spending Wisely

I have never been one to go wild with my tax refund. We use it to pay off debt and make household repairs. I am hoping our tax return will be over $3500. At least half of this money will go to paying off our credit card. Luckily, we made many household repairs and purchased new appliances last year. Some of our wooden blinds are broken so we might replace them. This will cost about $300.

Something Fun

Of course, all work and no play makes Jack a dull boy. Thus, we like to take a few hundred dollars and go on a small vacation. It will be a local beach trip so we won't spend a lot of money on travel expenses. We plan on staying for one night in a hotel and another night at a family member's house. In addition, we are also going to spend some money to take our children to Disneyland for my daughter's fifth birthday. Tickets will cost about $300. Gas will set us back another $50 and we will take another $50 for food and fun money. All in all, we will spend about $600 on family fun this year. I can't wait to file my return!

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