The Vine tackles tax season
| | | | | March 2023 Spring is here — and so is tax season. If you're counting on a tax refund this year, you're not alone. According to a new LendingTree survey, 36% of Americans are relying on their federal tax refund to help them pay bills and eliminate debt. "As inflation has increased, more people — even people with good-paying jobs — are living paycheck to paycheck," says Ken Tumin, LendingTree senior industry analyst. "Some may have decided to pare down their withholdings to have that money every month instead of a bigger refund check." Whether you're getting a refund or think you will owe Uncle Sam some money, read on for how to make the most of your situation. —Ismat Mangla, Editor Owe money at tax time?
You have options If you're facing a hefty tax bill, it can be daunting to figure out how to pay it. And if you don't pay your tax bill on time, the IRS can impose a failure-to-pay penalty, which is typically a percentage of the taxes you didn't pay. But don't stress just yet. If you find yourself asking, "What if I can't pay my taxes," you can turn to the Internal Revenue Service (IRS) for help, or to third-party companies that specialize in tax debt relief. The IRS offers several installment plans on a short-term and long-term basis. You may also consider a personal loan. Another option: Put your tax debt on a credit card with a long 0% introductory APR period. This is one of the most cost effective ways to save money when paying your taxes, as you won't have to pay any interest during that intro period — but only if you pay off the debt during the intro period. | | Make the most of your tax savings A third of Americans expecting a tax refund plan to put that extra cash toward their savings, LendingTree's survey reports. If you're one of them, make sure you're putting that money to work. Consider opening a high-yield savings account or certificate of deposit (CD) to take advantage of today's increased interest rates. While the average interest rate on savings accounts is around 0.32%, it's possible to find rates near or above 4.00%. DepositAccounts by LendingTree checks rates daily at more than 5,000 banks and credit unions to help you find the best possible return on your savings. Shop around for the best option. | | The cost of buying a car has increased — here's how to deal Thinking about buying a car this spring? In December 2022, the average price of a new car was up 4.9% year over year to a record-high $49,507, according to Kelley Blue Book. If you need of a new set of wheels, consider these four tips for buying a new car in 2023: | | Do your prep work. Start by shopping around — both for the car and the financing. "If you need to finance the purchase, make sure you get pre-approved for a loan before you ever set foot on the lot," says Matt Schulz, senior industry analyst at LendingTree. "Chances are that the rates you'll find through a site like LendingTree or through your research will be better than what you'd be offered at the dealership." | | | Make a downpayment on your car loan. Minimizing the amount you borrow is the best way to save as interest rates continue to rise. | | | Use calculators and budgeting apps to figure out how much you can afford. | | | Consider delaying your purchase. New car prices are on the rise, but fewer Americans are buying used cars — which means the prices on used cars may come down. Waiting a bit could result in significant savings. | Pro Tip "Take advantage of loan calculator tools to help you figure out how much you can afford. Play around with the loan amount, length and interest rate to find the sweet spot. It's way, way, way better to know that before you head to the dealership than to rely on the car salesperson to tell you what they think you can afford." —Matt Schulz, chief credit analyst at LendingTree | | | |
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