Judiciously utilizing your income tax refunds

Feb 12, 2011 |Comments: 0 |

Most of the people often feel the tax season to be tiring, troublesome, frantic and last but not the least taxing. But there is a positive side to it as well which most of us often ignore. Many of the taxpayers qualify for the tax refunds on account of various tax saving schemes and programmes offered by the Internal Revenue Service (IRS) department. Taxpayers also prepare and manage their tax returns in such a fashion that they receive a handsome refund from the IRS. Most of them view these refunds as part of their saving and also plan for their judicious utilization.

While filing our income tax return we can know the exact amount we should be receiving income tax refunds. Taxpayers those who are filing their returns online using the e-file program can get these tax refunds directly in their bank account in as early as 8 to 10 days of e-filing their returns. What to do with your refunds? Following are few ways in which the same could be utilized:

Paying the Debt against your credit cards - Debts held against your credit card is the most expensive way of finance availability. Repaying these debts should be your highest priority as this will help you save considerably and at the same time release your credit card limits.

Creating or adding to your crises fund – We all should have a crises fund which would be utilized at the time of emergency. In case you suddenly lose your job or face any other kind of disturbance in your regular income this fund will help you tremendously. This fund should typically be able to sustain you for three to four months without any other source of income.
Set up an Education fund – Education is something which helps you all through your life and there's never too late to acquire knowledge or new set of skills. One must create an education fund which can be utilized on educating self children or even grand children.

Reworking on your Mortgage – Yet another prudent way to utilize your tax refund could be reworking on your current mortgage. You can get the loans to be re-financed or re-worked to your advantage by contributing a lump sum amount towards your mortgage.

Home Renovation – It would be such a nice idea to renovate your house or just a part of it from your tax refunds. You may utilize these funds in making renovations that may again be entitled for certain tax exemptions in the next tax year. Money spent on installation of energy efficient utilities can be claimed as tax credits.

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