Frich Reveals: Tax Season Is Here
It's tax season, babyyyy! And yes - we're here to flip the script because taxes shouldn't be stressful or scary. With the right tool, it's the perfect opportunity to put your finances in order & maybe even get a nice return 😉
Last week we partnered up with H&R Block to cover all things taxes & we've got something to set you up for success! While each person's tax situation is different, H&R Block can help you navigate this process with ease. They will always give you their pricing upfront and there won't be any surprise charges. Oh - and we've secured a 20% discount for you!
Okay let's dive in ⬇️
How do you file your taxes?
One of the most common questions we receive at Frich is literally anything about taxes. And we get it! Taxes are super confusing. And we aren't taught about them in school. And guess what - the downside of messing up your taxes? Pretty scary. So how do Frichies navigate this?
21% pay someone to do their taxes for them, 25% have their family help them, and 31% use an online tax software to file their taxes. Our take? Do whatever feels most comfortable for you!
General rule of thumb - if you're a "regular" salaried employee, you probably don't need to pay a specialist to do your taxes for you, but if you're a freelancer / have multiple sources of income, it can be a good idea to seek out some help!
What do you usually do with your tax refund?
The average tax return last year for a Frichie was $655. So what do you do with the sudden cash influx?
Here's what your peers did - 23% put the money towards credit card debt, 26% splurged on something fun, 30% put it in their savings, and 21% invested the money.
Here's a fun fact. If your tax return was $655 (the average for Frichies) & you invested it in the S&P500 when you received it (let's assume April 15, 2024), today you'd have approximately $750. If you had put the money in a HYSA, you'd have $678.
P.S. Don't rely on a tax return as a guaranteed amount of money you'll receive. Instead, you should always be ready to find out that you actually owe the government in taxes. Remember that you should have the money available in a HYSA to be able to pay it by April 15.
Do you max out your 401(k)?
The one thing you'll hear personal finance experts repeat over & over again is that you should always try to put money aside in a 401(k). Why? If you're a "regular" salaried employee, most companies will match your contributions up to a certain % of your annual income. That's literally a raise without asking for one. The second reason? You get to invest this money pre-tax, meaning your overall taxable income decreases & you'll pay less in taxes.
However, when it comes to actually managing to put money aside for a 401(k), here's how your peers are doing: 21% always try to max out their 401(k), 35% can't really afford to max it out but contribute what they can, and 44% don't invest in a 401(k) at all. Looks like there's a lot of room for us to grow together!
