Tax season tips to get ahead
- It's your money, use it wisely!

Getting a tax refund can feel like a nice bonus, but your tax refund isn’t just free money – it’s your earned money. So, it’s important to take that into account when deciding what to do with it. Sure, it’s fun to splurge, but by maximizing your refund and using it wisely, you can make real progress toward rebuilding your credit and improving your overall financial health. Wondering how? Don’t worry – we’ve got you covered.

3 ways to use your refund to get back on track financially

Your tax refund is a great way to get a head start on achieving your financial goals. You can decide what works best for you and aligns with your immediate needs or goals, but here are a few options to consider:

1. Pay down debt and repair your credit

Using your tax refund to chip away at outstanding debts can help boost your credit score, particularly if you have any past due bills or collections affecting your credit report. By bringing down the balances on your credit cards, you will lower your credit utilization ratio, which is a key factor in determining your credit score. Plus, by making extra payments, you can reduce interest and get out of debt even faster.

Quick tip: Focus on high-interest debt first (like credit cards) or start by knocking out smaller debts for some quick wins.

2. Open a high-yield savings account

Life happens. Car repairs, medical bills, or a leaky roof can pop up when you least expect it. Setting aside even a small amount for an emergency fund can be a game-changer by preventing you from going further into debt for unexpected events. High-yield savings accounts keep your money accessible for when you need it while earning money when you don’t.

Quick tip: Start with an amount you’re comfortable putting aside, then gradually build up to cover 3-6 months of living expenses.

3. Invest in your future

Investing in personal development and growth can have massive payoffs in the future. Consider investing in skills or education that could boost your earning potential long-term. Or contribute to a retirement account – your future self will thank you.

Quick tip: If you’re planning to contribute to a retirement account, start as early as possible, even if’s just a small amount each month. Over time, compound interest can help your savings grow significantly.

Are you getting the most out of your refund?

It’s also important to make sure you’re getting the largest refund possible by claiming all eligible tax credits and deductions when filing. Take advantage of credits like the Child Tax Credit and the Earned Income Tax Credit if they are available to you, and don’t forget potential deductions like student loans or retirement investments. Noted in this TurboTax article, there are obvious – and not so obvious – ways to help you capitalize on every penny you could get back. Small oversights and missed opportunities can cost you money in your pocket.

Also make sure to check your withholdings on your W-4 so that next year you don’t owe or receive a massive refund. Here’s why: if you regularly receive a large refund, it means you’ve been overpaying taxes throughout the year (and giving the government an interest-free loan with your money). If adjusting your tax withholdings for next year can increase your take-home pay, you can use that money for saving, investing, or paying off debt throughout the entire year rather than waiting for it to arrive at tax time.

Leverage the tools out there

If you’re unsure of how to maximize your refund, work with a tax professional or use a reputable online tax software service to guide you. And if you are unsure how to manage your refund, meet with a financial advisor or credit counselor to make informed decisions that will boost your confidence in managing your financial future.

Remember, it’s your money

You worked hard for your money – make sure you claim every tax credit and deduction you are entitled to so you can get back as much as possible. And use it wisely, invest it thoughtfully, and watch how it can help contribute to your future financial goals. Hopefully this can be the start of a new journey – one that leads to greater financial stability, credit rebuilding, and new opportunities ahead.