While receiving your tax return can feel like you’ve won the lottery, it’s important to hold off on booking that Caribbean cruise until you’ve taken an honest look at your finances. For most people, an extra few thousand can significantly help their financial situation. The experts at Simplified Tax have been serving the Sparta, WI, area for over 30 years.

Below they outline some ways to spend your tax return:

Pay Off Debt

While it might be painful to use your tax return to pay off your credit cards, dragging around interest-bearing debt is simply putting good money after bad. If you still have a balance afterward, consider transferring high-interest credit card debt to an interest-free card. However, be cautious; applying for new credit cards can affect your credit score.

Stockpile Your Emergency Fund

Having cash on hand for emergencies, such as an auto repair or medical expense, can provide you with great peace of mind. Financial experts suggest having at least six months of savings in a two-income household. For a single-income household, the suggestion is one year’s worth of savings. Many banks offer money market savings accounts that have a slightly higher interest rate than traditional checking or savings accounts.

Contribute to Your Traditional or ROTH IRA

If you want to see your tax return dollars soar, take the high road and contribute to your IRA. With a 6% annual average return, your money will pay you back in the long run. The annual contribution limits in 2017 and 2018 are $5,500.

Invest in Yourself

Have you ever wanted to go back to school for that advanced degree? What better way to fund your aspirations than by using your tax return to pay yourself back? You will be investing in yourself and your earning potential.

Donate to a Cause Close to Your Heart

If you have a cause that is close to your heart, consider investing some of your tax return as a donation. Not only will this warm your heart, but you can also deduct the contribution on the following year’s tax return, up to certain limits. 

If you have specific questions about how to best invest your tax return dollars, or you need a trusted professional for this year’s tax preparation, the experts at Simplified Tax are on hand to help you out. Call them at (608) 269-2633 or visit their website for more information.