Plan for spending tax refund

Make the Most of Your Tax Refund Money


When tax season comes around each year, your level of excitement or dread to file your taxes can vary greatly depending on your current life phase.



When tax season comes around each year, your level of excitement or dread to file your taxes can vary greatly depending on your current life phase. Factors such as your salary, mortgage, and possible dependents can have a huge impact on your taxes: you may owe the IRS money, or you may receive a refund – big or small. If you are expecting to receive a refund from the IRS, it is best to plan in advance how you will receive that money and how you are going to spend it.

Take advantage of fast and secure direct deposit

According to the IRS, the “best and fastest” way to receive your tax refund is to select the direct deposit option when you file your taxes; you are even able to deposit into up to three accounts. (1) An additional benefit of using the convenient, secure, and fast direct deposit option is not having to worry about a paper check getting lost, stolen, or returned to the IRS as undeliverable. All you need to opt in to direct deposit from the IRS is your bank account’s routing number and account number from your checks. If you do not file your own taxes, you will want to be sure to bring that information with you when you consult a tax professional.

Prepare a plan for spending your refund wisely

If you are anticipating getting a refund from the IRS this year, you may want to consider preparing a plan for how you will spend your refund. Seeing a big return could be tempting to spend solely on fun things, and you may end up spending more than you intended if you do not have a careful plan of action ahead of time. Whether you want to apply your refund toward getting out of debt, contributing to a savings account, or taking a vacation, having a plan ahead of time will help keep you aware and accountable. Some people prefer to use their refunds to achieve multiple purposes – one common formula is to split the refund into portions of varying amounts to go toward loans, savings, and fun, instead of picking just one of those options. Whichever way you choose to spend your refund, make sure you decide what is best for you and your family before receiving the direct deposit or paper check from the IRS. 

The information contained in this article is intended for general educational purposes only and is not to be construed as legal, tax, or financial advice. Please consult with your own legal, tax or financial advisor for guidance with your own particular circumstances.

Sources and more information:

1. Internal Revenue Service (IRS) website, https://www.irs.gov/Individuals/Get-your-refund-faster-Tell-IRS-to-Direct-Deposit-your-Refund-to-One-Two-or-Three-Accounts 





The information contained in this article is intended for general educational purposes only and is not to be construed as legal, tax, or financial advice. Please consult with your own legal, tax or financial advisor for guidance with your own particular circumstances.