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Be a Smart Taxpayer

By on May 2, 2011 in Tax

Tax time is here again. If you’re one of the lucky ones that is expecting a refund from Uncle Sam, what are your plans for your expected windfall? Learn seven ways to put your refund to good use. These are techniques that you can even apply to any bonus funds that come your way, and not just when your tax refund check lands in the mail or in your bank account.

Fund/Deposit Retirement

It’s never too early or too late to start or add to your retirement savings account. If you are an employee, you may have a retirement account offered by your employer. Contributions to the retirement account may come directly out of your paycheck. For those times when the amount you contribute throughout the year is not enough or does meet the maximum annual contribution amount, you can make a lump sum contribution with all or a portion of your tax refund money. In addition to the employer-sponsored retirement account, consider using the refund money to start a separate retirement account to ensure that you can live out your golden years with the lifestyle to which you are accustomed.

Upgrade your PC

Depending on the amount of your refund, you may have enough to upgrade your computer or another electronic device. One idea is to make a bet with yourself, such as “If I lose 10 pounds by the time my refund comes in the mail, then I’ll treat myself to that new TV I’ve been coveting.” This is a great motivator for getting you to accomplish one of your goals and put the money to good use.

Donate It

You also have the option to give it all away to charity. Even if you donate a portion of your refund check to charity, it creates a win-win. First, the charity or organization you donate the money to benefits by raising the cash it needs to fund programs or offer its services to the group it exists to help. Second, you get to write off your charitable contributions.

Buy Health/Fitness Equipment

Your health is priceless. Whether it is buying a new bike or finally being able to afford that gym membership, put your refund to good use—put it towards your good health. If the gym is not your thing or riding an outdoor bike isn’t enjoyable, consider investing in some exercise equipment you can install and use in your home instead.

Plan for the Unexpected

The extra bit of cash you get back as your tax refund may be the cash infusion you need to plan for the unexpected. Use the money to write your will. Establish the life insurance policy you’ve wanted to set up to take care of your family in case something happens to you.

Tax refund time can be an exciting time—especially when you’re getting back a nice chunk of change. Taxpayers tend to dream about putting this money to some good use. Rather than splurge and spend, consider some ways you can use the entire amount or a portion of the refund check to make a difference in your finances or your life.

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