The average tax refund ranges from $2,300 to $3,200. Although the figures vary depending on the state, Floridians are one of the highest receivers of cashback. No matter where you live, you’ve probably asked yourself the same question. How do i spend my tax refund wisely? Find out four financially smart options below.
I filed my taxes, now what?
You found the right tax preparer and filed your taxes. What happens next? More importantly, when should you expect your tax refund?
Taxpayers who claim the Earned Income Tax Credit or the Additional Child Tax Credit may experience a refund hold. Additionally, the IRS cannot issue these refunds before mid-February. Being said, the IRS expects the first EITC/ACTC related refunds by the first week of March. As long as the filer chooses direct deposit and there are no other issues with their tax return, the funds will be available to the taxpayer.
1. Make an emergency fund
Use your refund to plan for emergencies. A backup supply of money can get you out of a lot of sticky situations, such as fixing your car or paying for unplanned medical expenses. Millionaire Dave Ramsey suggests creating a starter fund of $1000. You never know what will happen, so spend your tax refund on preparedness.
2. Pay off your consumer credit cards
For some, credit cards equate to instant gratification. It’s a way to obtain goods or services and pay for them later. The bad part is, debt adds up quickly. Use your IRS refund to pay your balances down, or eliminate them altogether.
3. Examine life insurance plans
Life insurance is often an afterthought; however, funerals are expensive. Using a portion of your refund to prepay for coverage could save you, or your loved ones, from headaches.
4. Proceed with home improvements
Renovations add value to your home. Therefore, they are a smart move. Not only will strategic upgrades improve your home’s equity, but they will also make your home easier to sell. Before you begin construction, do some research to avoid overly trendy options. A quick Google search will help you learn which improvements are among the classics.
Where is my tax refund?
If you want updates on your tax refund, you can go directly to the IRS website. The tracker displays progress through three stages of your tax return:
1. Return Received
2. Refund Approved
3. Refund Sent
You will need your Social Security number, filing status, and the exact whole dollar amount of your refund to use the service. Until then, consider the information above to plan the best way to use your refund money.
