{"id":828,"date":"2016-03-09T15:29:51","date_gmt":"2016-03-09T20:29:51","guid":{"rendered":"http:\/\/www.etax.com\/blog\/?p=828"},"modified":"2016-02-29T15:30:19","modified_gmt":"2016-02-29T20:30:19","slug":"using-your-refund-smartly","status":"publish","type":"post","link":"https:\/\/www.etax.com\/blog\/2016\/03\/09\/using-your-refund-smartly\/","title":{"rendered":"Using Your Refund Smartly"},"content":{"rendered":"<p>Now that you\u2019ve got yourself a pretty sizeable refund from the IRS, you should consider what that actually means and how you should use your newfound cash.<\/p>\n<p>Basically, what just happened is you lent the federal government money for a year, without interest, and the money you are getting is really just your own. You\u2019ve likely been told it\u2019s better to receive no refund, because then the money will have stayed with you throughout the year.<\/p>\n<p>However, it\u2019s almost like an accidental savings that you didn\u2019t prepare for, so when you get it, you should spend it wisely. On average, credit card debt in America is around $3,700 and most refunds hit a median range of around $3,000. So what should you really do with that extra cash?<\/p>\n<p><strong><u>Pay Your Debts<\/u><\/strong><\/p>\n<p>It only makes sense to use this extra chunk of change to pay debt that is accruing interest and costing you more in the long run. You won\u2019t miss the money, and you\u2019ll be happy to miss the debt. If your refund is large enough, consider putting some into a savings account and applying the rest to your debt.<\/p>\n<p><strong><u>Emergency Fund<\/u><\/strong><\/p>\n<p>Establishing an emergency fund that contains at least six months of savings for living expenses is a great use of your tax refund. This can make or break you should a financial <a href=\"https:\/\/www.etax.com\/blog\/2024\/10\/15\/disaster-loss-tax-deduction\/\">disaster<\/a> strike.<\/p>\n<p><strong><u>Pad Your Retirement<\/u><\/strong><\/p>\n<p>Use your refund to add money to your retirement account, so you won\u2019t have to scramble for a contribution right before tax time. The sooner you add money to your account you can accrue interest which is only to your benefit. If you add to a traditional <a href=\"https:\/\/www.etax.com\/blog\/2025\/08\/19\/big-changes-coming-for-inherited-iras-in-2025\/\">IRA<\/a>, you\u2019ll have a <a href=\"https:\/\/www.etax.com\/blog\/2026\/02\/19\/new-auto-loan-interest-deduction-how-to-save-up-to-10000-on-your-taxes-2025-2028\/\">deduction<\/a> ready for next year.<\/p>\n<p><strong><u>Estimated Taxes<\/u><\/strong><\/p>\n<p>If you are self-employed or work for yourself, or if you have income generating investments, you have to pay estimated taxes during the year. Deadline are essential, though so be sure to pay before them. Use your refund to knock out a huge part of your tax bill.<\/p>\n<p><strong><u>10% for yourself<\/u><\/strong><\/p>\n<p>While you should save at least 10% of your income and 10% toward paying off debt, you should take a small portion and treat yourself. Once all your essentials are covered and you\u2019ve paid off some of your debt, you\u2019re entitled to spend a little on yourself. It is your money after all.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Now that you\u2019ve got yourself a pretty sizeable refund from the IRS, you should consider what that actually means and how you should use your newfound cash. Basically, what just happened is you lent the federal government money for a year, without interest, and the money you are getting is really just your own. You\u2019ve [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[125],"tags":[464,409],"class_list":["post-828","post","type-post","status-publish","format-standard","hentry","category-general-filing","tag-savings-account","tag-tax-refund"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.6 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Using Your Refund Smartly - eTax.com\u00ae Blog<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.etax.com\/blog\/2016\/03\/09\/using-your-refund-smartly\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Using Your Refund Smartly - eTax.com\u00ae Blog\" \/>\n<meta property=\"og:description\" content=\"Now that you\u2019ve got yourself a pretty sizeable refund from the IRS, you should consider what that actually means and how you should use your newfound cash. 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