What is a smart thing to do with your refund?

It can be tempting to treat a tax refund as found money, but instead, you should use it to better your finances. Boost your savings, pay off debt, and invest for your future . Also consider using your refund to further your education, upgrade essential items in your life, or make home and car repairs.

What are two ways you can use your tax refund wisely?

Experts agree that prioritizing savings and debt payments are the best ways to use a tax refund. A refund presents a great opportunity to shore up your emergency savings, make investments or increase your financial security.

Should I use my tax refund to pay off credit cards?

Unless you have other bills that you are behind on, bills that are in collections or you don't have an emergency fund for other unexpected expenses, your tax refund is best used to catch up on paying off credit card debt .

What will give me a bigger tax refund?

Specifying more income on your W-4 will mean smaller paychecks, since more tax will be withheld. This increases your chances of over-withholding, which can lead to a bigger tax refund. That's why it's called a “refund:” you are just getting money back that you overpaid to the IRS during the year.

How to get $10,000 tax return?

You could end up with a $10,000 tax refund if you've paid significantly more tax payments than you owe at the end of the year .

Who qualifies for $7000 tax credit?

The California Constitution provides a $7,000 reduction in the taxable value for a qualifying owner-occupied home. The home must have been the principal place of residence of the owner on the lien date, January 1st.

Is there a way to borrow against your tax refund?

A RAL is a loan that allows a taxpayer to borrow against an anticipated income tax refund . These loans actually are made by banks but are often offered by tax preparers, and sometimes by CPAs, in conjunction with preparation of the tax return.

What is the biggest tax refund ever?

Ramon Christopher Blanchett, of Tampa, Florida, and self-described freelancer, managed to scoop up a $980,000 tax refund after submitting his self-prepared 2016 tax return. He also allegedly claimed that he earned a total of $18,497 in wages — and that he had withheld $1 million in income taxes, according to a Jan.

Can I spend my tax refund?

Pay Down Your Debt With Your Tax Refund Personal debt and car loans also may have higher interest rates. Use of your tax refund to lower or pay off credit card debt can help minimize the unnecessary interest payments . If possible, it is strongly suggested to fully pay off your credit cards as bills come in.

Is it worth paying IRS with credit card?

Credit card tax payments are charged a processing fee. No part of the fee goes to the IRS, and the amount varies on the payment processor you choose. If you pay with a credit card with rewards that don't outweigh the fee, it doesn't make sense to use a credit card .

Do credit cards have anything to do with tax returns?

Credit card debt can have an affect on your credit rating, but what about your tax return? For the most part, your credit card debt has no impact on your tax returns , but there are some very specific circ*mstances where debt can have a major impact on your return and your chances of collecting a refund.

8 Smart Uses For Your Tax Refund (2024)

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Tax season is upon us once again.

Some of you loathe this time of year while some of us don’t mind one way or the other. Then we have the folks who anticipate it so much that they’ve already spent the money before it hits the bank.

If you’ve already spent your tax refund mentally and haven’t even filed the thing yet, I want to encourage you to take a step back and let’s think about this for a second.

What if you could use this refund to actually getahead of your expenses? How about starting an emergency fund for life’s little mishaps? Or creating unlimited future income?

I know some of those don’t sound as glamorous as a weeklong trip in Miami, a pair of new shoes, a new television, or a down-payment on a car payment (yes, you read that right..a car payment); but the alternative is staying broke.

Do you like being broke?

My guess is no. So, if you’re ready to overcome this cycle of never having enough money to last you until your next paycheck, or paying interest on credit cards — I’ve got some helpful advice for you today. Here are nine smart uses for your tax refund.

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8 Smart Tips for Your Tax Refund

1. Pay down high-interest debt

Maybe you racked up some credit cards for an unexpected emergency or last year’s Christmas. Whatever the reason is, if those bills hit your mailbox every month, they’re accruing interest.

2. Build up or start your emergency fund

If you have no lingering high-interest debts, the best way to prevent yourself from going into future debt would be to start an emergency fund.

Open a separate savings accountthat you will have limited access to and put all or a portion of your tax refund aside in this account.

Next time you have an unexpected medical emergency, you won’t have to reach for those high-interest credit cards because you will already be prepared.

3. Invest for long-term savings goals

If your debt is out of the wayand you have a solid emergency fund, next you’ll want to make sure your long-term savings goals are being funded.

I’m talking about future down payments on homes, all-cash payments for vehicles, vacations, or college funds.

If you and your spouse want to travel Europe in a few years, invest your tax refund into an investment vehicle. Since you won’t need that money for a few years, it will have a chance to grow at an average rate of return.

The same applies to saving for a lofty down payment or your children’s future education.

4. Pre-pay bills

If you have a variable income, the best way to assure your future bills are paid on time is to pre-pay them.

With a large amount of cash on hand, could you pre-pay your rent, electricity, water, or cell phone bills?

5. Invest in your education

Is there a course you’ve wanted to invest in that will help your personal growth? Or maybe you’ve been looking into investing in a new hobby, like blogging?

If so, use your tax refund to invest in those courses or to pay for the expenses of your newly desired hobby.

This investment could pay off in an unexpected way. When I started Life and a Budget with a little left over tax funds, I never expected that I would earn over $7,000 from it the following year!

6. Perform necessary maintenance on your home or vehicle.

If you’ve been putting off necessary auto maintenance such as tire rotation, new tires, oil changes,etc, this is a great time to get caught up on these to make sure your car continues to operate properly.

The same applies to your home. If your faucet has been leaky or your oven has given out, make the necessary repairs while you have the extra cash.

Even if you’re up to date on all auto and home maintenance tasks, make sure you reserve some of your funds from your tax refund towards any future maintenance needs for the year.

7. Purchase life insurance

If you don’t have life insurance, you need some! Insurance companies provide some pretty decent discounts for individuals who pre-pay their life insurance policies for the year.

Compare life insurance quotes with Policy Geniusand secure life insurance with your tax refund. If your iPhoneis insured, please take the time to make sure that everyone in your home has some type of life insurance.

There’s nothing worse than having to deal with the grief of losing a loved one and during those times, the last thing you’ll want to worry about (or have your loved ones worried about) is burial expenses.

8. Make an extra mortgage payment

Reduce the life of your mortgage loan by making an extra mortgage payment or two this year.

Make sure you are clear with your lender that you are making an extra payment towards your mortgage and not pre-paying it.

If your lender allows, pay it directly towards your principal loan so that it will reduce the actual amount you borrowed.

Just imagine if you made an extra mortgage payment every year? You could shave off four or more years on your mortgage. See how much you can save with this additional payment calculator.

Wrapping ThangsUp

Of course, there are more fun things to do with your tax refund. A weekend in Vegas may sound pretty tempting and I know you’re certain that you will hit big over there and make your money back.

But let’s be realistic. You can spend all of your tax refund before you even get it or you can plan ahead and use your money wisely.

By doing the ladder, you’re setting yourself up for a future withfewer headaches because your bills will be pre-paid, your debt will be gone, and you’ll have money set aside for all that life will eventually serve you.

If you’re committed to your own financial success, I highly encourage you to make a pledge to save your tax refund this tax season.

America Saves Weekis a national effort to get good people such as yourself to set a savings goal, make a savings plan, and save automatically. Join millions of others who are taking time this week to start or grow their savings.

Take the first step today andtake the America Saves pledgeto save money, reduce debt, and build wealth over time. America Saves will keep you motivated with information, tips, and reminders to help you reach your savings goal.

Think of them as your own personal support system because let’s be honest – we all could use some support:) Plus, if you make a pledge using this link, you’ll be entered to win a grand prize of $500. See rules and all that jazz here.

Happy savings and make sure to pledge here!