Filing your taxes may not be your idea of fun but receiving a tax refund can be! Since the federal tax filing deadline for individuals has been extended to May 17, 2021, your tax refund may not come for a few more weeks. Once you receive your refund you might be tempted to use it on a shopping spree or dream vacation. While that is one option, check out some other fun and smart ways to use your IRS refund.
6 Things to Do with Your IRS Refund
1. Save It
There are a few ways you can choose to receive your IRS refund. You can get your refund directly deposited into your bank account or mailed to you as a paper check or debit card. Choosing to get your refund direct deposit is the perfect opportunity to put more money into your savings account and limit your temptation to spend it.
2. Pay off debt
Paying off debt isn’t fun, but it’s the second most common way people spend their refund. Whether you have credit card debt or college loans you need to pay off, consider putting your IRS refund towards your debt. Even if your refund isn’t enough to pay all your debt, putting as much as you can towards paying even your smallest debts can make a big difference.
3. Invest in the Stock Market
If you’re looking to invest your savings to reach your long-term goals, purchasing stocks or mutual funds has been reported to deliver better returns in the long run.
4. Create an Emergency Fund
This past year is a great example that emergencies can happen. A sudden job loss, medical emergency, or car repair can lead you to take out loans or carry credit card debt. Using your IRS refund to start an emergency fund is a great way to add cushion to your savings account.
5. Start a Business
Have you been wanting to turn your hobby into a small business, but money has been holding you back? Take advantage of your refund this year and use it to build up inventory, design a website, and get everything you need to turn your hobby into a business venture.
6. Boost Your Retirement Savings
Have you been dreaming of retirement? Speed up the process by adding your refund into a retirement account. Putting your IRS refund into an IRA or 401(k) is a great way to start saving for your future retirement, especially if your job doesn’t offer a retirement plan. Depositing your tax refund into your IRA every year will help you meet your retirement goals quicker.
If you want to stop from spending your refund all in one place, contact the tax professionals at Calabrese & Associates, P.C. Our team has the skills and experience needed to assist you or your business. Visit our website today to get started!