The tax filing season in America is ending soon and the citizens are expected to file their taxes by April 18. While this date has always been dreaded by taxpayers, others are eagerly waiting for this because it is time for tax refund.
According to US News, around 100 million taxpayers in 2015 received a tax refund of around $2,700. This average amount was said to be the highest rate that people received all year. But in 2016, it seems that Americans will get more as the Internal Revenue Service (IRS) just distributed tax refund amounting to $3,053 in February.
Keep in mind that tax refund is not a bonus from the government, but rather, it is the money you worked hard for and was temporarily loaned to the government when you overpaid your taxes within the year. With this said, taxpayers can do what they want with the tax refund money which they are about to get.
Then again, since the amount is quite a lot, receivers must avoid spending carelessly. It would be wise to use the money in something that would be beneficial like buying retirement insurance. To get more ideas on how to spend the tax refund, check out the tips below:
1.Boost your emergency fund
Having cash reserve is very important if you would like to always be prepared for life's surprises. With the emergency fund, you will be ready for anything that may come your way.
Robert Semrad, a senior partner at DebtStoppers, a bankruptcy law firm told Bankrate, "An emergency fund will provide a solid financial cushion should anything surprise you, such as an emergency room visit."
2.Pay your debt
Use the extra cash to pay whatever you owe. In particular, see which of your credit cards have the highest interest and choose to pay it first to prevent losing money on interest rates.
3.Fix your home
All homes have those things that needed to be fixed, but sometimes there is no extra fund to get things repaired thus the problem persist. The tax refund money is perfect to mend everything at home like broken windows, leaking roof and so on.
4.Go on vacation and relax
You have been working whole year round so taking a break using your hard-earned money is one of the best ideas. There is nothing wrong with having a bit of fun, just remember not to go over your budget for the trip.
Lastly, although it is very tempting to buy the newest gadgets or go on shopping spree, do not make a rush decision in spending your money. The best way is to put the money to good use and invest for your future.
Check out the video for basic ways you can file your annual tax return
(Disclaimer: Views and opinions expressed in this article are those of the author and not necessarily those of Yibada.)