Tax filling season has finally come to its end. Most of you will be expecting a tax refund, and some might already have it in their pockets while others will be having it in next few days. As per the reports of IRS average tax refund for past two year has been about $3000, and this year too they are expecting the average to stand out same.
Now comes the hard part: With such a good amount in hands most of the people will be thinking of where to spend it. There we have got something for you : The ideas to make the best possible use of your tax refunds.
Pay off the debts
Paying off the debts is like earning on your investment by saving the interest that you otherwise have to bear on your debt amount. So, the first best thing you can do with your tax refunds is to pay off any Credit Card debts standing against you. If you have several cards then you should start from by paying for the one with highest interest rate and then so on.
Build up savings
The other thing you can do with your refunds is to use them to build up the funds for emergencies, so that if at any time in the future you face a financial crisis you can use them without putting load to the Credit Cards and falling of in debt again.
Boost Retirement Savings
Are you close to your retirement, but still you don’t have enough money for your post retirement plans? Then it would be best for you to use the refunds to boost up your retirement savings by depositing them in your 401(k) accounts. As the taxes are not deducted from the 401(k) account, so these help you to earn more interest on your savings and boost up your retirement funds.
Contribute to child 529 college saving plan
If you have children and thinking of setting up aside some amount of money for their future education. Then you must consider of using the refunds to open and fund to a state governed college saving plan. These plans help you to grow your your savings and also let you to use it tax free when withdrawn for a qualified education program.
Donate to charity
According to new federal laws of 2013, you get an extra 25% deduction in tax for the first $1000 you donate to a charity. So donating your funds to a charity can be handful as you can do good as well as can save more tax at the same time.