4 Smart Ways to Use Your Tax Refund if you’re a Musician

taxes for musiciansIf there’s one thing that people hate doing the most – it’s preparing their taxes. This is particularly true for musicians, as most of them are regarded as self-employed and need to file their tax on their own. But of course, it’s important to keep in mind that not everything about tax is troublesome. There are also some good things about taxes. When you pay tax, you’re able to contribute to different government projects, which aim to help people in need. When you pay tax, you’re also entitled to claim tax refund (if there’s any), which can be used to reduce your debt or buy that gadget you’re dreaming to have. Tax refunds are like extra money, which you can spend however you want. However, in these tough economic times, it pays to be smart about money. If you’re expecting a tax refund this year, here are some ways to put your extra cash to good use:

Save

When it comes to saving, there’s no such thing as “too early” or “too late”. As long as you get that opportunity to save, take advantage of it. If you’re fortunate enough to receive a tax refund this year, put your refund check into your savings account. This will not just allow you to cover your living expenses in case of emergencies, such as when you don’t have a gig or you accidentally get injured while performing, but it will also help you to keep some money for future use, such as for your children’s tuition fees or for your home’s improvement.

Pay your debt

If you have high-interest credit card debts or loans, consider using your tax refund to pay them off. Remember that most debts and loans accumulate interest charges if not on a daily, at least on a monthly basis. And if you don’t pay them right away, that amount can build up, which result in you owing more than you can afford to pay. Depending on the rate of interest of your loan, you can save anywhere from 10-30 percent a year in interest if you pay your debt without delay. So if you receive a tax refund, one of the best ways to use it is to pay off any debt.

Invest in your musical instruments

When you have extra cash, it can really be tempting to buy something expensive, such as a flat-screen television or a high-end Smartphone. But before you think about purchasing such gadget, assess first if there are much more important things to spend your money on. Since you’re a musician, you may want to consider first buying a new guitar rather than a television; or a new drum set rather than a Smartphone. That new instrument can be used to improve your skill and win more gigs.

Fund your retirement account

If you’re like most musicians, you probably don’t have a regular paycheck coming in, so saving is really a must. If you already have a retirement saving plan, consider adding your tax refund into it to strengthen your financial position. If you don’t have yet retirement savings, consider opening an account and start investing.

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