9 Smart Things to Do with Your Tax Refund

9 Smart Things to Do with Your Tax Refund
By Morgan Quinn
RISMEDIA, Monday, April 06, 2015— Roughly seven out of 10 U.S. filers will receive a tax refund, with the average amount reaching around $2,800, according to the most recent IRS data. That’s a significant amount of money that can be put toward a variety of financial goals. If you are one of the millions of Americans expecting a tax refund this year, you might be wondering how to spend it.

Although it’s tempting to blow it all on a trip to the mall or on a night out on the town, your tax refund is an opportunity to do something smart with your money. The following are nine brilliant ways you can spend your refund.

Invest it

From buying stocks to putting money away in a college fund, there are several ways you can invest your tax refund. For example, you can use your tax refund to invest in a business, pay next year’s taxes and more.

Open a 529 Plan

Andrew Schrage of personal finance blog Money Crashers told GOBankingRates last year, “Lots of people put off starting a 529 savings account or an IRA for a child because they think they can’t afford it. Using a tax refund to do so is one way to get around that obstacle.”

A 529 Plan is a savings plan that helps families pay for college. With this plan, you can also qualify for special tax benefits because your earnings are not subjected to federal (or state) tax. In other words, the distributions are tax-free.

Give Your Home a Face Lift 

Tax refunds can vary. Luckily, it can require very little money to give your home’s value a major boost.

Pad Your Emergency Fund

If you are one of the 60 percent of Americans who are financially unprepared for an emergency, then this might be one of the first things you should do with your tax refund. Many experts recommend saving at least six months’ worth of living expenses, which can seem like a daunting goal. Putting your tax refund right into an emergency fund can give your savings a major boost without requiring a lot of effort. Plus, it can give you some much-needed peace of mind.

Fund Your Retirement

Diana Raymond

Diana Raymond

Licensed Associate Real Estate Broker
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