Use Your Tax Refund Wisely

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It's tax time again – which for many Americans means that a tax refund is on its way. If you're going to get a refund this year, how can you use the money to your best advantage?

Of course, it's always tempting to spend the check from Uncle Sam on something fun. But a tax refund could be sizable – the average amount in 2016 was $2,857, according to the IRS – so putting this money to work could help boost your progress toward your financial goals.

Here are some possibilities for using your refund:

* Help fund your IRA. If you were to receive a tax refund of $2,857, you'd have slightly more than half of the $5,500 annual IRA contribution limit for 2017, although, if you are 50 or older, you can contribute an extra $1,000. Consequently, you may find it much easier to fully fund your IRA for the year — and you should do exactly that, because an IRA is a great retirement savings vehicle. If you have a traditional IRA, your contributions may be fully or partially deductible, depending on your income, while your earnings can grow tax deferred. (Taxes are due upon withdrawal, and withdrawals prior to age 59 1/2 may be subject to a 10 percent IRS penalty.) With a Roth IRA, your contributions are not deductible, but your earnings are distributed tax-free, provided you don't start taking withdrawals until you're 59 1/2 and you've had your account at least five years.


* Help diversify your portfolio. If a market downturn hits one asset class, and that's where you keep most of your money, you could take a big hit. Owning an array of investments – such as stocks, bonds, certificates of deposit, and so on – can help prepare your portfolio to weather the effects of market volatility, By adding new investments, or increasing your holdings of existing investments, you may be able to further diversify your portfolio – and you can use your refund for this purpose. (Keep in mind, though, that diversification, by itself, can't guarantee profits or protect against loss.)

* Contribute to a 529 plan. If you have children or grandchildren whom you'd like to help send to college, consider using your tax refund to help fund a 529 plan. Your 529 plan contributions may be deductible from your state taxes, and your earnings are distributed tax-free, provided they are used for qualified higher education expenses. (However, withdrawals not used for higher education expenses may be subject to both income tax and a 10% penalty.)

* Pay off some debts. You can help improve your financial picture by reducing your debt load – but it may make sense to prioritize these debts. For example, rather than make an extra mortgage payment, you might want to first tackle those debts or loans that carry a high interest rate and that don't allow you to deduct interest payments. After all, your monthly mortgage payment will remain the same even if you make an extra payment, but if you can get rid of some smaller debts, you will free up some cash that you could use to invest for your future.

Think carefully about how to use your tax refund. It represents an opportunity that you won't want to waste.

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor. Courtesy of Walter Lother, Financial Advisor, in North Adams, at 413-664-9253. Edward Jones, its employees and financial advisors cannot provide tax or legal advice. You should consult your attorney or qualified tax advisor regarding your situation.

 


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Macksey Updates on Eagle Street Demo and Myriad City Projects

By Tammy DanielsiBerkshires Staff

The back of Moderne Studio in late January. The mayor said the city had begun planning for its removal if the owner could not address the problems. 
NORTH ADAMS, Mass. — The Moderne Studio building is coming down brick by brick on Eagle Street on the city's dime. 
 
Concerns over the failing structure's proximity to its neighbor — just a few feet — means the demolition underway is taking far longer than usual. It's also been delayed somewhat because of recent high winds and weather. 
 
The city had been making plans for the demolition a month ago because of the deterioration of the building, Mayor Jennifer Macksey told the City Council on Tuesday. The project was accelerated after the back of the 150-year-old structure collapsed on March 5
 
Initial estimates for demolition had been $190,000 to $210,000 and included asbestos removal. Those concerns have since been set aside after testing and the mayor believes that the demolition will be lower because it is not a hazardous site.
 
"We also had a lot of contractors who came to look at it for us to not want to touch it because of the proximity to the next building," she said. "Unfortunately time ran out on that property and we did have the building failure. 
 
"And it's an unfortunate situation. I think most of us who have lived here our whole lives and had our pictures taken there and remember being in the window so, you know, we were really hoping the building could be safe."
 
Macksey said the city had tried working with the owner, who could not find a contractor to demolish the building, "so we found one for him."
 
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