How To Refund Money On Quickbooks

what to do with tax refund

The April tax deadline will be here before you know it.

Since you aren't living on this money on a day-to-day basis, this windfall can be used to better your situation.

Your tax refund can be put to good use in reaching your financial goals. Some wise ways to utilize your tax refund include building up your emergency fund, getting out of debt, or saving towards your future.

Here are 10 ways to put your tax return to good use.

1. Start an Emergency Savings Fund

Everyone needs an emergency fund to help them through a tough financial situation, like a job loss, car accident, or medical emergency. You need an emergency fund to create a cash cushion between you and your need for credit to solve the problem.

The standard advice is to shoot for about six months of living expenses. I think that's fair, especially if you have two incomes in the home and your jobs are fairly stable. Know your risk though and make sure your emergency fund is big enough based on your personal situation.

If a six-month emergency fund seems impossible at first, start with whatever amount you can manage, such as $500-$1,000 to start. Then aim for a 3-month cushion, eventually building it up to a 6-month cushion.

If you're looking for a place to open up an emergency fund, look no further than an online savings account.

Related: How and Why to Start Building an Emergency Fund Now

Open a CIT Bank Money Market Account

Your savings rate doesn't have to be so-so. You can make the most out of your emergency fund by putting it in a high-interest earning account. A CIT Bank Money Market account is a great way to supercharge your savings with a high-interest rate.

Here are the benefits of using CIT Money Market Account.

Earns a 1.8% APY
Open with just $100
No minimum monthly balance requirement
No monthly fees
FDIC insured

CIT Bank Savings Builder Account

CIT Bank also offers a savings account. You can earn their highest interest tier by either maintaining a $25,000 balance or depositing $100 per month into the account. Other features include:

No opening fees
Can earn high interest the day you open the account
Zero maintenance fees
Daily compounding

The Savings Builder account is a tiered interest rate account, meaning the interest rate you'll earn is based on your account balance.

To get the highest interest rate, you'll need to either maintain a balance of at least $25,000 or make a monthly deposit of at least $100. Go to CIT Bank to learn more about the Savings Builder account.

Related: How Much Cash Should You Keep in Savings? (Plus Where to Put it)

2. Get Term Life Insurance

Life is limited. That's why there's life insurance. It's not a fun fact to face, but it's a reality we all need to prepare for now. Preparing will give you peace of mind and make it easier for your loved ones. Buying term life insurance is a fantastic use of your tax return.

Purchasing life insurance helps provide financial protection for your loved ones. It can be used to replace income, pay for college, or fund funeral expenses. Term life insurance offers a set amount of money for a specific period. The period of time can be anywhere from 2-30 years. If you pass away during the term of your policy, your beneficiary will receive the insurance money.

Get Term Life Insurance From Bestow

For many, the lengthy application process or hassle of medical exams are a barrier to applying for life insurance. But it doesn't have to be. Bestow is using technology to make the process of buying life insurance easy, inexpensive, and without medical exams.

Bestow provides term life insurance to help protect your family with whatever they need, whether that's income, home, education, or quality of life. Answer five quick questions, and you'll get an estimate in seconds.

Benefits of Using Bestow

Coverage $500,000 to $1,000,000
10 and 20-year term policies
Premiums starting at $8/month
No medical exams required (no needles!)
Quick quotes and coverage
A+ rating by A.M. Best

Related: Best Life Insurance Companies

3. Get Rid of Debt

Debt stinks. It causes stress and wastes money due to the high-interest payments. Get rid of it. Make a solid plan to get out of debt (i.e. debt snowball) and get it paid off as quickly as possible. A big tax refund could really wipe out a bunch of debt.

Whether you're using the debt "snowball" method of paying off the smallest balance first, or you choose the debt "avalanche" by paying your highest-interest debt first, what matters most is paying it down faithfully.

If you only have mortgage debt, consider making a principal-only payment. This reduces your total amount owed, rather than sending it all to interest payments.

Pay Off Debt App

To get rid of your debt, you want to do it in a way that works best for you. But when it comes to taking the first steps of paying down debt, many can be overwhelmed where to start. The Pay Off Debt app is an award-winning resource to help you through the process.

Pay Off Debt is an app that helps you create an action plan to pay off your debt. With it, you'll be able to pick a payoff strategy based on your debt situation. It even projects the day you'll be debt-free!

How it Works

After setting up your account, you'll input the exact amounts of your debt. Next, you'll let the app know how much extra money you have each month to put towards debt payments. Once that's down, you'll select the order you want to pay off each debt in. The app allows you to make adjustments to your order to find a strategy that works best for you and can get you out of debt the quickest.

Benefits of Using the App

Progress reports: shows a progress bar for each of your debts to keep you motivated
Debt Education: the app provides resources a page to help you learn more about managing debt
No fees for using the app (It's $4.99 to buy)

Related: A Simple Strategy to Get Out of Debt for Good

4. Save Money for Other Short-Term Goals

An emergency fund is a good starting point, but surely you have other short-term savings needs. Can you think of any reasons you'll need a large chunk of cash in the near future? Here are a few ideas to get you started:

new or used car
major car repairs
trip or vacation
boat or motorcycle
downpayment on a home
furniture
improvements to your home
new clothes

Don't go into debt to afford life's upcoming necessities and pleasures. Use your tax refund.

Related: The Important Things We're Saving for: Our Short Term Goals

5. Saving for Retirement

My favorite (best) thing to do with your tax refund is to use it towards retirement savings. If you have a 401K through your employer, you could stash the funds there.

Many people use their tax refund to open an IRA. You guys know I love these. You can open them on your own with an online stock broker and control just about everything that happens with the money there, unlike your 401K. Here are the IRA contribution limits for this year.

Of course, there are the tax benefits that come along with saving for retirement with your tax refund. You could actually increase your return if you contribute to a traditional IRA, or SEP IRA (or even a Solo 401K) if you're self-employed.

OnTrajectory

Planning for your retirement can seem overwhelming without the right tools. Many people use Excel spreadsheets to map out their financial future, but that has its limits. OnTrajectory is financial planning software and a retirement calculator rolled into one. The program helps you work towards financial independence.

OnTrajectory calculates the impacts of your current and future income, expenses, and investments. The calculator allows you to test various scenarios with your spending, rates of return, and tax rates over time. You'll also be able to track your retirement savings progress to stay on track to your FI goals.

Benefits of OnTrajectory

Free trial
No credit card to sign up
Low cost ($5/month when you pay annually)
Free email support
Unlimited investment, income, and expenses accounts (with a paid plan)
Gives you a clear picture of your FI retirement calculations

Related: Retirement Calculators [How Much Will You Need to Retire?]

6. Save for College Expenses

Some people choose to use their tax refund to open up a 529 college savings plan for their child(ren). Money that you sock into your 529 plan can grow tax-free as long as it's used for qualifying expenses.

As long as you choose a "savings" plan vs. a "prepaid" plan, your child(ren) can use the funds at any college or university that they want.

Here's our ultimate guide to 529 college savings plans.

CollegeBacker

You don't have to stop at your tax refund when it comes to investing in your child's education. Why not get friends and family to chip in their refunds too? CollegeBacker allows you to set up a 529 plan plus a gifting page to let others help you save.

Setting up a 529 plan with CollegeBacker is quick and easy (it takes under 5 minutes). They only recommend low-fee plans and portfolios that reduce risk as your child approaches college age. Plus, they make college savings social by letting others make contributions or give a savings gift for birthdays and holidays.

Related: 5 Ways to Save for College

7. Go Back to School

Use your tax refund to go back to finish or start a degree. I love seeing people invest in themselves. Do it for fun, or see it as a way to increase your earning potential at your current (or future) employer.

LinkedIn Learning

Investing in learning is money well spent. LinkedIn Learning offers over 15,000 expert-led courses to help you level up your education and skills. Zig Ziglar, a motivational speaker, and author, said, "If you are not willing to learn, no one can help you. If you are determined to learn, no one can stop you."

Use LinkedIn learning to not only advance your career but for your personal growth as well. They offer training programs on social media, marketing, SEO, writing, and a ton more. There is no limit to the educational opportunities on LinkedIn. They add new courses daily.

LinkedIn Learning offers different levels of training from beginner to advance. You can also access courses that work with your schedule and the amount of time you'd like to spend. Programs can be anywhere from under 10-minute to 3-hour detailed lessons. You can leverage your new skills in your career by earning certificates to add to your LinkedIn profile. Start exploring courses on LinkedIn Learning.

Related: 7 Best Online Training Sites to Expand Your Skills

8. Pay Next Year's Taxes

If you own a business or have income where the tax isn't withheld, it's likely a smart idea to take some of your refund and use it to make estimated tax payments or at least save it for future tax payments.

9. Start a Business

Now you have the cash to start that business you've always wanted. You can tell someone is really passionate about their business idea when they self-fund the thing like this. Using your own money to start a business is definitely a better idea than taking out some business loans or borrowing from your relatives.

Related: Start a Business with No Money: Do You Want it Bad Enough?

10. Give to Charity

If the tax refund is a surprise to you, then why not use it to help a worthy cause? There are definitely plenty of organizations that could use the funds more than you. If you do decide to give, use a qualifying charitable organization and get a deduction next year on your taxes, if you itemize.

Related: 10 Ways to Give More to Charity

If you haven't filed your taxes yet, you can do so with any of these reputable tax software companies:

TurboTax
TaxAct
H&R Block Online

Related: Where to Get Your Taxes Done [The 3 Best Places and Prices]

Next Steps

There are lots of things you could do with your refund: save, spend, give, or invest in your future. Pick one or a few smart ways to spend your tax refund that will give you lasting benefits.

What do you plan to do with your refund? If you already spent the money, what did you spend it on?

10 Smart Ways to Spend Your Tax Refund

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