Our taxes are almost done and I have kind of a crazy admission that comes with them. Our income will be higher than my original estimate of $24,000 because of our tax return. I estimated our tax return at $6,000 for that, but we’re expecting closer to $8,400.
My husband is the officer for a (very) small corporation , and the way that corporate taxes work is that if the company gets a refund it flows through to the officers. Because the company is getting a refund, we are getting more back than I anticipated. This is the first year we have had a refund from the business, as it has had carry over losses for the past few years from its start up.
Even with the flow-through business tax refund of about $3,000, we will qualify for the Earned Income Tax Credit of about $3,400, the Child Tax Credit of $2,000, bringing our annual income up to $26,400, not including the money I’m making, tracked in the Goals and Progress page.
My case worker told me that tax refunds don’t count against us for low-income health insurance if we don’t save them. They can’t be in the bank longer than a couple of months. Doesn’t that seem kind of backwards? Like people with low incomes should be encouraged to save, and perhaps benefits are scaled back rather than removed outright? Maybe that’s just me.
Anyway, with the $8,400 we’re expecting around April, I am planning to:
– pay off the remaining car loan – $3,800
– pre-pay both car and renter’s insurance for the year – $900
– renew my driver’s license – $31
– pre-pay life insurance for me and Mr. Penny for the year- $480
– put $1,000 in the emergency account
We will then be debt free and have no recurring monthly expenses besides rent, reducing our regular monthly output by $280 a month. (Our utilities are paid by the company and a portion of our rent check.)
That leaves about $2,189 of the refund for us to use responsibly. I would really appreciate your comments and suggestions of ways to use the money to further our goals, since I can’t leave it all in the bank and still qualify for low-income health care. You can see our budget here to get ideas of what we’re not buying right now. We receive food stamps and have a small chest freezer, so it is not necessary to stock up on food.
– buy gift certificates for Costco, the cheapest place in the area to buy gas
– buy a replacement key and key fob for the car for $150 (we just have the one that came with our car because $150 is outrageous for a key!)
– stock up on household goods like toilet paper, dish soap, etc.
– get a membership to the YMCA for gym access, kids’ swimming lessons, and family activities (they offer a low-income scholarship, but I’d still need to pay an out of pocket fee that isn’t in the budget right now) – about $360 for a year
– replace our mattress, which is 10 years old and quite worn out – $650?
– put together a 72-hour emergency kit (We live in Northern California, and the earthquakes in Haiti and Chile have me feeling like we’re not quite well enough prepared!)
– spend it all on lipstick, movies, books, expensive restaurants, and pretty fabric for sewing class (just checking if you’re paying attention, haha!)
Edited to additions from the comments:
– fire-proof box
– family activity, such as a day at an amusement park or movies
– give some to charity
– museum membership
– save for Christmas and gifts
What do you think we should do with the unexpected extra cash?