CHICAGO, IL--(Marketwired - April 24, 2014) - With the tax deadline behind you, and the IRS expecting the average refund to be more than $3,000, you're certain to entertain thoughts on how to spend the money. However, before you take the cash and splurge on the newest shiny object, the Illinois CPA Society has some tips on how to use your refund to bring larger returns to your overall financial outlook.
Pay Off Debt
Use your refund to make an extra payment on your mortgage or student loan. If you've only been paying the minimum on your charge card bills, make larger payments or pay off the balance.
Build an Emergency Fund
Put aside a portion of the refund for an emergency. In general, you should have roughly nine months worth of living expenses saved in case of an accident or if you lose your job.
Pay for a Big Ticket Item
Have an event like a wedding or graduation coming up? Would you like to make a major purchase like a car or home? Consider using the money as a special savings fund.
Invest in Your Home
Your refund may not be enough to redo your kitchen or bathroom, but it can pay for some smaller home improvements. Use the extra cash to paint a room or cabinets, replace your bathroom sink, swap out your faucets, install a programmable thermostat or spruce up your yard.
Start an IRA
It's always a good idea to invest in your retirement. Consider opening or adding to a traditional or Roth IRA. A traditional IRA generally allows you to put away pre-tax money in a specific fund tax-deferred, which means you'll pay taxes only when you take distributions. A Roth IRA doesn't qualify for a tax deduction, but you won't have to pay any tax on withdrawals during retirement as long as the funds have been deposited for at least five years.
Fund a Taxable Account
Use the extra cash to buy shares in a mutual fund or stock you've been considering -- but may feel is appropriate or not available in your 401(k) plan or IRA.
Save for Continuing Education
Use your refund to make an investment in yourself. Apply the funds towards a continuing education class to help you move forward in your career or into another area that interests you.
Find a CPA
While it may seem like a windfall, if you received a large refund, you may actually be paying too much to the IRS over the year. A CPA can help you determine the right withholding amount to put more money in your pocket with each paycheck. Contact a CPA near you with the Illinois CPA Society's Find a CPA Directory at www.icpas.org.
About the Illinois CPA Society
The Illinois CPA Society (ICPAS), with over 23,000 members, is one of the largest state CPA societies in the nation. For more than a century the Society has advanced the highest ethical and financial standards of the profession, and remains a leader in educating the public on financial issues. The Society focuses on four key initiatives in serving its members and the public: advocacy, information, education and connections.