Author: Jenna Elkins, Communications and Digital Media Specialist Posted: April 15, 2021
From Friday, February 12 to Monday, May 17, 2021, millions of Americans are expected to file tax returns, with majority filing before the deadline. If there are no issues with the tax return, the Internal Revenue Service (IRS) anticipates nine out of 10 taxpayers will receive their refund within 21 days of when they file electronically with direct deposit.
In most cases, taxpayers either love or hate Tax Day – they either receive money or they owe money. For those who expect to receive a refund, last year’s average tax refund was more than $2,500. Unfortunately for many, the COVID-19 pandemic wreaked financial havoc on countless people and businesses in 2020. Now is the time to take the refund and use it smartly – whether that is investing it in the future and paying off debt.
Here are four tips for those who are receiving a tax refund in 2021:
Pay off debt. If you have credit card debt, this is the first place you want to spend your tax refund – even if it’s just little bit. Not only will this give you a little more financial freedom, paying off your debt could save you from owing even more to the credit card company down the road. According to NerdWallet, paying off $2,200 in credit card debt, for example, could save you $3,585 in interest if you were otherwise making just the minimum monthly payment.
Start an emergency fund. If there is anything the COVID-19 pandemic has taught us, it’s that the most unexpected thing can happen. If you don’t already have an emergency fund, now is a good time to start one with your tax refund. There is no possible way to know what will happen in your future, so it’s best to be prepared for the unexpected, such as a large medical bill, loss of a job, car breaks down, etc.
Support your community. Now, more than ever, your community needs you. The arts and hospitality fields were a few of the hardest hit groups from the COVID-19 pandemic. If you currently are financially sound, a great way to spend your tax refund is to support these groups who are suffering from pandemic losses. Find local chapters of nonprofits or organizations that have been set up to support the arts and hospitality groups to donate your tax refund to. Bringing our cities and communities back to life is critical!
Invest in your future toward becoming a CPA. Do you want to become a Certified Public Accountant (CPA)? Not only is the process long, it can be very expensive – application fees, exam fees, review materials, etc. Use your tax refund to jumpstart your plan toward becoming a CPA. Not sure where to start? Visit https://nasba.org/exams/cpaexam/.
