How to Spend your Tax Returns

6 Apr

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We all love that moment, once a year, when we get a check from the tax bureau detailing how much we have as a tax refund. For many, that refund signals the time for unplanned shopping and other expenses that can quickly leave your tax return dry. However, it may also be worthwhile to consider that when you are careful how you spend your tax returns, then you can actually use that money for something more productive and beneficial in the long term.

This mindset is actually tough to get into if you are used to running your tax refund to the ground shortly after it is given. Still, when you start thinking about the fact that tax refunds are essentially yours all along, then maybe you be a bit more responsible with your own money. After all, any extra funds on top of your budget only mean that you have extra money for immediate concerns.

Think about these priorities first before you consider going out to spend your tax refund on a shopping holiday.

  • Increase your emergency fund. You need an emergency fund for those moments when you have to spend beyond what has been budgeted. For many, not having an emergency fund is the primary reason why they go into debt. Put your tax returns into an emergency fund or increase your current fund so you are better prepared for a rainy day.
  • Pay–off your debts. It’s not every day you get extra money for debt payments. Make it count. Use this money to settle your high interest debts so you are only left with more manageable sums that you can pay off over the long-term.
  • Shopping with your tax refund is reasonable if you really have an item of immediate need. Clothing, a medical procedure, or home improvements are some worthwhile targets for a sizable tax refund, if you know you really need these. A good way to assess need versus want is if you have been putting this off for a while because you didn’t have the money for it. Perhaps now is the time to take care of these needs with your tax refund.
  • Invest. Some investments like tax-sheltered accounts or even conventional mutual funds will help you make favorable returns within a reasonable amount of time. Use your tax refund on an investment in order to see it grow further.

Your tax refund is your own money. It doesn’t come from heaven as a gift; rather, you worked really hard to earn it. Use it wisely so you can see that it went to a fruitful venture, not an impulsive spending free on things you never really needed to begin with.

17 Responses to “How to Spend your Tax Returns”

  1. Robin April 1, 2013 at 5:09 am #

    I have found a website that suggests that if I am still legally married (not yet divorced), then I cannot file my income tax return as if I am in a common-law relationship with someone else; I must file as ‘separated’ and as a single parent. Just can’t seem to find anymore info on this topic without spending $$$ on a lawyer or consulting an accountant, or Revenue Canada.

  2. Dione April 19, 2013 at 6:14 pm #

    Hi, just wondering what people are planning to spend their tax return on this year. I have no idea what I will be doing with mine yet.

  3. Milda April 26, 2013 at 6:22 pm #

    A friend of mine accidently claimed something on his tax return and recieved his refund. However, he already spent the money he recieved from his refund. So if he ammends his return correctly and owes the irs…what would happen if he couldn’t fully pay it back by April 15th of this year?

  4. Modesto April 26, 2013 at 11:54 pm #

    I’m a 19 year old full time student living at home and I also now work full time. I believe I may have provided over half of my support for 2012.

    My mom was unemployed for the majority of 2012, and made $4.7k. I made $10.4k.

    I’ve been working and helping my mom pay for rent, food, gas, car maintenance and other necessities since our house was foreclosed when I was 16. I also pay for all of my education expenses that aren’t covered by financial aid. My parents are divorced but my father sends us a fixed amount of money per month (about $400-$500).

    Still, it’s not unusual that I contribute more rent than she or my father does for the month (sometimes an entire paycheck’s worth or more, ~$600-$800). This has made it extremely difficult for me to save my own money. When my mom does have money, she spends it irresponsibly on alcohol or expensive dinners, things we don’t need, etc. She has no sense of management for the money she makes. What might be a problem is that we’ve kept no documentation of me contributing to rent. We pay month to month by cash or money orders, which I realize now is foolish already. I feel lost and taken advantage of.

    I’m hesitant to move out because I still have a year of college to finish before I transfer away from home hopefully. It’s overwhelming to think about working, going to school, and finding a place to live as I don’t know any people to move out with. We’ve been homeless before after we lost our house and I fear that it will happen again when I’m no longer here to help her.

    She claimed me last year and spent my tax return without telling me. It took me a week or two to find out what happened to it. I feel frustrated and stuck, and she has claimed me again this year, except I haven’t filed yet.

    The problem is, she has filed already, and has spent her entire return. I realize she may be in debt if she amends her return to remove me as a dependent.

    I’m just now learning that I receive a substantial less amount of money when i’m claimed as a dependent and I think it’s unfair. Do I even qualify to claim myself? Is there anything I can do to help my situation?

    Thank you for reading this and trying to help.

  5. Dick April 28, 2013 at 11:31 pm #

    During Tax returns, if I spent 2000 dollars in moving, and non reimbursed by my employer, do I get 2000 dollars back from Taxes?
    Also, do you have to prove the amount you spent thru receipts and what not?

  6. Nova May 2, 2013 at 2:33 pm #

    We have about 200 publications, equal to that in forms, and spend billions of mailing, recordkeeping, storage, and the endless sorting out of mistakes when they happen every year Americans complete their United States Tax Returns. How do you think we could simplify the tax code without abolishing it for defense purposes and protecting our citizens and those who are TRULY disabled and in need of long-term care? What about a flat rate percentage of tax paid yearly on income set at 20% with no forms to fill out and just an electronic recordkeeping system where your taxes were paid through withholding from income received before you get it? My thoughts on this matter will appear in my group theUSvotingBooth in Yahoo later this week.

    I will not accept terroristic or agressive responses on this topic. If you have a remark that is agressive or deciminates violent remarks it will be dealt with. Civil community responses are highly recommended and welcome.
    Presently, the United States Government spends billions on sending the over 200+ publications, and 300+ forms to the 200 million or so taxpayers the US says are filing returns regularly. If we used a simpler tax code having everyone pay a flat 20% rage regardless of income and had it withhold every year eliminating those forms, and pubs, and the volumes of confusing laws that go with it then I think it would save is billions.

    We could then cut costs by reducing the work force necessary to explain all of those laws and put more to work helping increase the work foce and maybe give our country new knowledge and other capabilities.

    What do you think?

    No terroristic remarks please – I know taxes are a touchy subject, but let’s remain calm, civil citizens.

  7. Isidro May 17, 2013 at 7:47 am #

    My husband filed his taxes last year before we were married and said he never received his 2006 tax return. He spent almost a year in Iraq so he should have recieved all that tax money back since it’s suppose to be tax free. What should we do in order to get 2006 tax return?

  8. Myong June 3, 2013 at 3:14 am #

    I am filling a joint tax return with my wife in state of Texas. I used some free online calculators and it looks like i wont be getting anything in refund. I have put the wages, federal taxes and the school fee i paid last year but still no refund. Someone told me if i go to any professional CPA they may help me to get some good refund by showing some extra expenses like i paid for gas, i spent something with doctor etc. Is there any way i can get some good refunds without getting into trouble?

  9. Raymond June 8, 2013 at 4:30 pm #

    I received $1680 last semester but never got a W-2 form, only a 1098-T form that says “for student.”

    With the grant money, I purchased a car. Since the car is not “school stuff,” do I have to claim the amount spent in my tax return?

    Thanks for the help.

  10. Tawna June 13, 2013 at 12:30 pm #

    I thought that they would collect my tax return before it ever got to me but they never did. Can I cash and spend the check or will they come after it?

    I am recently divorced, have three children, and a broken car. My husband isn’t paying his child support. I know I am supposed to pay off the loan but I need the money from this return BAD right now.

  11. Cristobal July 11, 2013 at 7:12 am #

    I am new to the field of merchandising. I travel to various stores within a 50-100 mile radius, stocking and servicing different products. I travel anywhere between 30 and 200 miles per day. Can I deduct this milage on my income tax return for 2007 as a job expense?If so, how should I best keep records of my milage? What about gas? Can that be an expense as well? I do not get paid milage reimbursement from the company that I work for, if that makes a difference. Thanks in advance for all your advice.

  12. Marinda August 10, 2013 at 5:13 pm #

    I am thinking about going self employed and doing some research. If all the profits from my business will be going towards me for weiges, there will be nothing from the business to tax. So would I fill out a seperate tax return form for me as well as the business? Or would it be included in the same form?

  13. Johnnie September 10, 2013 at 3:36 am #

    It was VERY small, but about the same as my normal tax return. Does that mean I will either break even or owe this year if everything else is the same?

    I plan on getting my taxes done this week, but just wondering what I should expect.

  14. Joette September 21, 2013 at 9:55 am #

    I am getting my taxes back soon, like a lot of people around the planet and I’d like to get some inspiration for what that money could go to. Therefore I ask, what do you plan on spending your tax return on?

  15. Arthur September 21, 2013 at 9:56 am #

    I used my personal savings to open a new location for my s-corporation. Can I deduct the money I spent on my personal tax return?

  16. Kareem September 21, 2013 at 12:13 pm #

    I am a grad student who spent 2008 in Turkey and am wanting to know if I am able to submit a FAFSA for 2009/2010 without having filed a tax return. Many thanks for your help!

  17. Thea September 21, 2013 at 12:13 pm #

    I don’t really know much about tax returns and why we have to file them. haha. I’m a student and this year i worked part time for about 7 months. I didn’t work much and i think i made only about $2,000. A little info about this would help. thanks!

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