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All posts tagged tax refund

Tax-RefundWritten by: Lisa Castle, CFP®

The Internal Revenue Service estimates that about 75% of taxpayers will receive a refund this year.  Many of these taxpayers say they are going to be responsible with their refunds by paying down debt or saving it in their emergency fund.  Here are a couple more options for spending your tax refund:

  1. Re-balance your portfolio – instead of selling stocks to re-balance, use the extra funds you receive to build up your exposure in the areas that need re-balancing
  2. Prepay your bills – Prepay for your car insurance, car loan payments, phone bills, home insurance, etc.  Just be sure to monitor your statements so that you are created for the correct amounts and that you do not end up paying for something that you did not request.
  3. Make home improvements – Don’t forget you may qualify for a residential energy tax credit by making energy-efficient improvements to your home.
  4. Buy a car – Take advantage of the record low car loan rates and use your refund as a downpayment on a new or newer car.

If you are one of the millions that receive a sizable tax refund every year, why not use the extra money to help out your personal balance sheet.  Here are some ideas for your refund that will be more beneficial than just spending it on whatever…

  1. Use the cash to pay down your debt.  Reduce any high-interest credit card debt you may have, or pay down the principal on your mortgage.
  2. Contribute to an IRA or a 529 plan for your children.
  3. Want to have a vacation, set aside some of your refund for just that.  Setting up a separate account helps for just that.  You could even do this for your holiday shopping!
  4. Have some smaller home improvements you want to make, use some of this money to do just that.
  5. Have a stock you want to invest a little in, open up a brokerage account and do just that!
  6. Do a check on your emergency fund to make sure there is enough in there in case you get laid off or hurt.
  7. Maybe it’s time for some additional life insurance?

These and may more tips are available at