Are you getting a big IRS income tax refund?
It’s always nice to get a nice chunk of change coming back to you, isn’t it?
But what will you be doing with your income tax refund?
I’m not always fond of looking forward to a large refund but they do happen and I know some people love getting them. If you are getting a large income tax refund then at least put some thought into how you are going to use that money.
Having money in the bank is a great thing and when it’s a sizable amount you can really make some differences with your finances.
I came up with some ideas for a large income tax refund.
I’ve broken it out into different sections to make it easier for you to find something of interest. Make sure to read through to the end and add your suggestion in the comments!
25 Ideas for Your Income Tax Refund
1. Pay off credit cards
If you have credit card debt then a large tax refund can be your opportunity to put a dent in or end your credit card debt. Pay it off and you save by not paying as much interest charges!
Think about it – if you are paying interest on your credit card debt then you are eroding your potential for wealth. Go attack that credit card debt!
2. Pre-pay mortgage
You can take that refund and pre-pay your home mortgage. You may be able to do an extra month or better. Not only does this payoff the principal on your mortgage quicker but you also save on interest payments over time.
You have the potential to save thousands here.
3. Pay off student loans
If you have private student loans then now is a great opportunity to pay some off.
Why private student loans? Those tend to be the ones with the higher interest rates. Even if they aren’t private loans you can still make some extra payments to help get rid of your loans earlier!
4. Car loan
Pay off all or at least some of your outstanding car loan. Make sure the payment goes toward the principal.
5. Contribute to an IRA
Get money into your IRA now so you aren’t waiting until the last minute next tax season. A Traditional IRA will give you tax breaks now while a Roth IRA gives you tax breaks when you retire.
Add a little padding to your financial future now so you don’t have to worry so much later on.
6. Contribute to a 529 plan
Not only are you investing in your children’s college future but many states offer plans with tax advantages.
7. Put it into a high-yield savings account
Sock it away and earn better interest than you would n a brick and mortar bank. (Check out some great offers and bank rates for high-yield accounts.)
8. Buy CD’s (Certificates of Deposit)
Set up a CD ladder for continued returns.
9. Start a small business
It doesn’t take a lot of money to start up a small side business. You could even try your hand at creating a website!
10. Build Up Your Emergency Savings
If you don’t already have 8-12 months of emergency savings away then now would be a good time to start!
11. Invest in Stocks
Take a small amount that won’t hurt you if you lose it and learn to invest in stocks. You can open up an inexpensive online brokerage account. (Check out Sharebuilder, TradeKing, and some others for low cost trades).
12. Take a College Course
Register for a college course or technical course. This could be for your own interest or as a way to help advance your career.
Think about it, you might be able to take a course that could potentially put you in line for more money in your career.
13. Travel and Go On Vacation
Take the money and run!
Ok, maybe not like that but it could be a nice chance to plan out a great vacation with the family! I’m always one for saving but building great memories with your family is important too. Everything in moderation.
14. Fix Up Your Home
Paint, renovate, upgrade appliances, get new furniture – make your home a nicer place to live in.
Some renovations can yield tax breaks while also building up value for your home should you ever want to sell.
15. Set Up a Fun Money Account
Take the refund and put it into a sub account in Capital One’s online 360 Savings (or similar savings account). Label it fun money. Throughout the year take money out to do things like go to the zoo, amusement park, museum, movies, etc…
Do this and you have money set aside to have some fun with. It also keeps you from reaching into other funds you may need or worse, using credit you might not be able to pay back quickly.
16. Upgrade Your Work Wardrobe
Replace some of those worn-out threads. It can make you feel better at work as well as look better to get you noticed. A few quality pieces might be all it takes to improve your wardrobe.
You never know, your boss might take notice and put you up for that next promotion.
17. Take Care of the Car
Get your car a tune-up and a full detail cleaning. Taking care of your car will help it last longer and perform better saving you money in possible future repairs. It will also help the re-sale value of your car should you want to sell it.
18. Grow a Garden
I love our modest garden. It’s so relaxing and satisfying taking care of it. You get an extra bonus if you can grow your own vegetables to eat!
19. Donate to Charities
Give money/time to those who need it more!
20. Eat Better
Have you been telling yourself that you would eat better if you could but it’s too expensive to eat more natural and organic? Put the money aside to buy better food for yourself and build up better eating habits.
21. Enroll the Kids in an After School or Weekend Program
Sign them up for martial arts, little league, soccer, music, swimming, dance, etc… You not only enrich them you also might be able to give yourself some free time too.
22. Take Up a New Hobby
Learn a musical instrument, play chess, learn a language!
23. Get Together With Old Friends
Call up some of those old buddies and treat them to a night out to the local pub or to a local sports game.
24. Take Your Spouse Out On a Date
Hire a sitter and treat your spouse to a night on the town!
25. Do Something You’ve Never Done Before
Think outside the box and stretch your boundaries. Go out and live. Experience. Create great memories.
Of course these are all suggestions.
Make sure you take some time and think about what you will do with your income tax refund. Don’t be impulsive and let that money burn a hole in your pocket. Be responsible and take care of debts. Have a little fun too, if you can.