With about 72% of taxpayers receiving a tax refund and with refunds being on average $3,000, refund checks can have a significant impact on many Americans’ finances, especially this year.
If you’re looking for ways to maximize your refund, you’ve come to the right place. Everyone wants to make the most of their refund money, so here are five ways you can use your tax refund to add more green to your pocket!
Pay Off Debt
How will paying off debt make you money? High-interest debt, like credit card debt, can drain your budget every month. In addition, if you only pay the minimums on credit cards, you’ll be overpaying for your purchases.
If you knock out a debt or two with your tax refund, then those monthly payments you would’ve been paying can now go towards your money goals including vacations, saving up for a house, or investing. Think of it as giving yourself a raise!
Put It in High-Interest Savings
Even though we aren’t in an age of high-interest rates, that doesn’t mean you can’t put your money to work. Depositing your money into a high-interest savings account can help you earn around ten times more than the average offers of banks. Shop around to find the best banking option for you and your money.
Stash Away Money in a Certificate of Deposit
Do you have a long-term goal like saving up for a house? Give yourself a running start by putting that cash in an account that can earn you more money like a certificate of deposit (CD). It’s a low-risk way to boost up the interest earned on money you’re going to need in a few years.
Invest in Yourself
With many states having some sort of shelter-in-place guidelines, you may be finding yourself spending more time at home. Use that time you had spent on your commute and invest in leveling up your skills.
There are many online options where you can gain a certification or experience with programs used in your field. While no one can predict the job market, you can increase your value by expanding your expertise.
Another way you can invest in yourself is by diversifying your income with a side business or a side hustle. For example, I had a friend who launched a craft business on the side at the beginning of the year. When her department had layoffs because of the financial fallout of the coronavirus, she was able to still bring in income through her Etsy shop.
Invest in the Market
If you haven’t been able to invest in the stock market in the past, you may be able to start now given then stock prices are lower. While things are volatile in the short term, if you look at the historical returns, you’ll find that investing in the stock market may be a wise long-term financial decision.
One way to build a diversified portfolio without having to follow individual companies’ performance is by investing in index funds. An advantage of going with index funds is that you have lower fees which means more of your money is working for you. It’s a win-win situation!
Don’t worry about knowing the tax implications of investing. TurboTax Premier will ask you simple questions about you and your investments and give you the tax deductions and credits you’re eligible for based on your answers. TurboTax Premier is the only major online tax preparer that supports importing over 1500 stock and 2,250 cryptocurrency transactions at once, directly from financial institutions, saving you time and ensuring accuracy. TurboTax Premier has partnered with over 300 financial institutions and investment platforms to allow you to auto-import your investment info seamlessly when doing your taxes.
If you have questions, you can connect live via one-way video to a TurboTax Live Premier CPA or Enrolled Agent, with an average 15 years experience to get your tax questions answered. TurboTax Live Premier CPAs and Enrolled Agents are available in English and Spanish, year-round and can also review, sign and file your tax return.
Also, don’t forget that Intuit’s Mint can help you effortlessly manage your finances all in one place.
Your Tax Refund Plans
I’ve used many of these steps when it comes to making the most of my tax refund year after year, and it’s had a positive impact on my finances. I’ve created different streams of income, and I’ve reduced financial stress.
I’d love to hear from you – what are your plans for your tax refund this year?