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Windfall wisdom

Parents with money to spare from the coming IRS checks can put the funds to good use. Here are some intelligent ideas.

Figuring out what to do with this summer's IRS windfall won't be a problem for many parents. Some part of most family's checks probably will go to buy clothes, backpacks and other back-to-school goodies. But if you've got a little breathing room, this is a chance to do something special with your money.

Parents of children younger than 17 will get checks of as much as $400 per child that are supposed to arrive in late July or early August. Most people will get a check if they qualified for the child credit on their 2002 tax return, although it will be offset by any back taxes owed or certain other delinquent debts, such as child support and student-loan payments.

Here are some ideas for spending or setting aside your windfall if you are fortunate enough to be getting one:

Give your child an incentive to save some of this summer's allowance or earnings by offering matching grants. For each dollar your child saves, you might provide 50 cents, $1 or $2, depending on what you think is appropriate. Set the match amount in advance and let your child choose what to buy. This works particularly well if your child has been salivating over a bicycle or expensive pair of shoes.

Buy a new computer for the family and hope it will be used for schoolwork at least part of the time. Children who don't have access to a computer at home are at a significant disadvantage to their classmates.

Open an account for each of your children to save for college. If investment risk turns you off, buy savings bonds in your name with a child as the beneficiary on each bond. Down the road, you might be able to cash them tax-free for college tuition. New I bonds now earn 4.66 percent and EE bonds 2.66 percent, but rates change every six months. For more information go to www.savingsbonds.gov or ask at your bank.

By Helen Huntly
St. Petersburg (Fla.) Times (June 26, 2003)