What To Do With Your Tax Refund

Big Spender Vs. Big Saver: What To Do With Your Tax Refund

From the practical to the preposterous, there’s plenty of things you could spend your tax refund on. Before you purchase anything – or make a deposit – take our tax refund quiz to see if we can predict what you’ll do with your tax refund.

Then, come back to learn more about what you could actually spend your refund on, or save it for.

Every year, millions of people across the country file their income taxes. And while they are not guaranteed, many filers look forward to receiving a tax refund.

While most recipients probably wouldn’t be too upset about receiving a little extra cash in their account, they may wonder about the best way to spend their tax refund.

What is a tax refund?

When you find yourself with unexpected money from a tax refund, you basically have two choices: spend it or save it. Before determining if you’re more on board with Team Spender or Team Saver, it’s important to know what a tax refund is and what determines the amount you may receive.

If you receive a refund, it means you’ve paid more taxes than necessary over the course of the previous year. Your refund would be the amount of that overpayment. Tax refunds are typically mailed as a physical check or through a direct deposit from the Internal Revenue Service (IRS) into a checking or savings account.

Tax refund amounts are determined by several factors. These can include your annual income, the number of dependents you claim, tax credits you receive, interest paid on loans and more. While many people choose to prepare their taxes on their own, having a tax professional assist you is also an option.

Spender or saver?

After taking our tax refund quiz, did you fall into the saver or spender category? Whatever your results, we’re sharing some money moves to inspire how you can spend or save your tax refund.

Big Spender

Did you discover that you’re a big spender? See how you can spend and plan for your future.

• Education: From preschool to grad school, investing in educational endeavors can impact one’s future earning potential, skills enhancement and career options.
• Home improvement: Whether it’s a simple update or complete remodel, paying for home improvement projects can potentially increase your home’s value. And they can also bring you enjoyment for years to come.
• Charitable gift: A donation to your favorite charity can go a long way to do some good. You can also deduct some contributions next year if you give to a qualified organization, outlined by the Internal Revenue Service (IRS).
• Debt reduction: Paying off debt can help improve your credit score and decrease your debt-to-income ratio. This can help you qualify for better quality loans in the future and provide some peace of mind as well.

Big Saver

If you feel more like stashing your money than spending it, take a look at a few ways you can maximize your dollars and cents.

• Investments: Investing your money might be a great solution if you need time to think about how you want to spend it. Considering your comfort level with risk, options like stocks, bonds or offerings like GM Financial Right Notes^® may help you boost your financial goals. Download the prospectus for more information.
• Emergency funds: When life throws curveballs, having an emergency fund to cover living expenses is highly recommended by most financial professionals. Use your tax refund to either start or add to an existing one.
• Retirement savings: Whether you’re 20 years or 20 days from retirement, it never hurts to use your refund to boost your retirement savings. Check with a tax professional or your financial planner for clarification on how much you can contribute and any relevant deadlines.
• Savings goals: Maybe you’ve been dreaming of the ultimate vacation. Or maybe you’re ready to put a down payment on a new car. Whatever your goal or dream, using your tax refund to pay for it can help you achieve it faster.

It’s never too late to make smart financial moves with your tax refund. For more ideas, check out what you should know about vehicle down payments, review a beginner’s guide to investing or explore new ways to budget your money.

By Katrina Lewis, GM Financial

A fan of suspense novels, food trucks and pop culture, Katrina Lewis is passionate about writing to educate and inform, especially when it comes to finances and customer options when leases or contracts are ending. A “boy mom,” Katrina loves playing monster trucks with her son, random day trips and venturing out to various festivals with her family.