Spend tax return wisely
Tax season is upon us, and however much you dread completing your return this year, thereís always solace to be had in the potential of a sweet reward: the refund.
The average tax refund in 2011 was more than $2,900, according to CNNMoney. Receiving a large check typically feels like free money, and the desire to spend it on a big-screen TV often is difficult to overcome.
However, itís still your hard-earned money. Andrea Woroch, a consumer and money-saving expert for Kinoli Inc., offers ways to avoid wasting your refund:
Pay down debt. Paying off existing debt can lead to guilt-free fun in the future. Youíll have more money each month once minimum payments are behind you instead of paying interest rates.
Invest in your home. Tackle home improvement projects youíve been putting off. This will lead to an increase in your homeís value, so itís a wiser investment. Buy discount gift cards to home improvement stores from sites such as GiftCardGranny.com.
Donate to charity. Donating to a nonprofit is actually a tax write-off, so you can deduct your donation for next yearís taxes.
Open a Roth IRA. In addition to being more flexible than other retirement plans, Roth IRAs grant tax breaks when money is withdrawn during retirement.
Improve yourself. Continuing education is the key to better job prospects. Look for courses at your community college or attend a regional conference in your industry.
Fund your emergency fund. If the contents of your savings account is comparable to that of your childhood piggy bank, consider using your refund to raise it to a more adult-worthy level.
Adjust your withholdings. If you consistently receive a large refund, itís a sign that youíre withholding too much from your paycheck. The money you get every April could be saved, invested or used to pay down debt during the year, so update your W-4 and strive to ďbreak evenĒ with the IRS. Use the IRS Withholding Calculator at irs.gov.