With W-2s and 1099s in hand, most folks expecting a refund are lining up to file those returns. The doors are open to the many tax preparers who have waited patiently for the season to arrive. Once the money arrives there are many things that can be done with those much-anticipated dollars. Plan to get the most out of the money and improve your financial position. So, let's discuss a few of the many options of spending the refund checks.
Checking, savings or money market account
One option is to save your refund check for a rainy day or emergency. Experts advise that savings should equal between three and six months of expenses for cushion in the event of layoffs or cutbacks. This rainy day or emergency fund is separate from other accounts to make sure that it is not spent or mingled with the rest of the funds. It is to be used for the mortgage, rent, car repairs and such in times of need.
Instead of spending every cent received, try placing some in a checking, savings or money market account. The Internal Revenue Service (IRS) through direct deposit will place your money electronically into your account as instructed. The IRS will even divide your refund over multiple accounts with the completion of Form 8888, which is the Allocation of Refund Form.
- Written by Carlee McCullough