Not sure what ways to use your tax return from the IRS? Here are a few income tax return uses that might come in handy this tax season.
Getting money back from the government means you’ll have a choice of different income tax return uses. Most people will take this opportunity to contribute to something that could help them in the future. So instead of spending your return on something non-essential, consider doing something that could benefit your financial situation or even your future!
5 Ways to Use Your Tax Return
If you need help filing your taxes, we recommend signing up with H&R Block. They have free tax filing software, so you can do your own taxes. However, they also have a team of tax pros who are happy to file on your behalf. Feel free also to use their free tax calculator to estimate how much money you can expect from the IRS.
Add to your retirement fund
It’s never too early to start prepping for your future. While you may want to use the money for something else, think about adding it to your IRA or Roth account instead. This is money you could withdraw at a lower tax bracket once you retire. Therefore, you will actually get more spending money by funding your retirement than you would using it now.
Keep in mind that you will be penalized for taking money out of your retirement account early. So, it’s important to make sure you don’t need the funds for other emergencies. For more information on how to start a retirement fund, check out these retirement tips and tricks.
Pay off any remaining debt
This is one of the best tax return uses to help you save money in the long run. Instead of earning interest by putting your money into savings, why not pay off any loans you may have? By chipping away at what you owe in debt, you can save big on expensive interest payments from the bank.
Think about college loans, even outstanding credit card bills. If you only get a little money back, it’s still worth putting it towards those payments. The more you contribute, the sooner you’ll be debt-free in no time! If you have a mortgage, you can put money to pay off some of the balance, and choose to refinance to lower the monthly quote. Check out loanDepot for competitive home mortgage rates.
Contribute to savings
Putting your money into a savings account is one of the best income tax return uses. After all, you never know when you might need some spare cash in the future! If you’re planning to buy a house, purchase a car, or pay for education, you’ll be happy you have the money.
It’s important to add the cash to an account that you won’t be tempted to withdraw from. If you only have a checking account, consider opening a separate savings account. This will allow you to keep your spending finances separate from your savings. Not to mention, most banks allow you to earn interest (free money!) on whatever you have in those accounts.
Invest in more money-making opportunities
A little bit of cash can go a long way in securing your future. That’s why you may think about investing your tax return money into another lucrative endeavor. For example, use the money to repair or improve your home to increase its value when it’s time to sell. Or you may consider purchasing stocks or shares of a business that has growth potential.
Self-starters may also use their tax refund to start a new business. That money can help with inventory, licensing fees, or even creating an online store. While it may not cover all your expenses, it can help your dream of being a business owner come true. In addition to using your refund, here are a few other ways you can fund your start-up business from scratch!
Treat yourself to a vacation
We get it – this year has been hard on many of us. If you’re in desperate need of a well-deserved break, then put your money towards a relaxing vacation. Head to a secluded island, rent a cabin in the forest, or just head out of the city for the weekend. All these things are excellent income tax return uses! Check out Hotwire to find deals on flights and hotels in every destination you’d like.
Self-care is extremely important to your physical and mental well-being. That’s reason enough to treat yourself to something special this year. Although you may not be investing in a financial cause, you are investing in your happiness!
Spending your tax refund on unnecessary things or material items is tempting. However, getting money back from the government is a great opportunity to improve your financial situation (or your mental health). Hopefully, one of these income tax refund uses will come in handy!
Filing your taxes may be stressful, but H&R Block can help make it less painful. Here are a few other tax tips and hacks we have for surviving the upcoming tax season.
