Tax Refunds – Getting Back What Was Always Yours
A tax refund is simply the government giving you back money that was really always yours in the first place. After paying your income taxes, if the taxes you paid are more than what you actually owe to the government, than you are entitled to get a tax refund. It feels great to get those hard-earned dollars back, especially when there is always a need for a lump sum of cash for one reason or another. After getting your tax refund, there are a few things you can do with that money. Here are a few ideas of smart ways to use this tax refund.
5 Things To Do With Your Tax Refund
1 – Pay Off Outstanding Debt Paying off outstanding debt should probably be the first thing you do with a tax return, especially debt that incurs a high interest rate, such as credit card debt. This can translate into thousands of dollars saved at the end of the year on money that would have otherwise been wasted on interest rates. 2 – Contribute to an RRSP Contributing to your RRSP account is another area you should consider spending your tax refund. Spending tax refund money on RRSPs can provide you with additional tax savings when you claim this money in the future. 3 – Open Up an RESP Account Contributing to your child’s Registered Education Savings Plans account is a great way to spend your tax refund money. You’ll not only benefit by the savings for your child’s future education, but you’ll also benefit from the Canada Education Savings Grants that the government provides to those who contribute to funds such as Registered Education Savings Plans. For more information on RESP application requirements, visit TorontoRespAgent.com. 4 – Get Life Insurance Many people don’t invest in life insurance simply because they can’t afford to spend the extra money per month for it. When you get a lump sum from your tax return, perhaps you may want to consider using this opportunity to buy yourself some life insurance so that your family is taken care of. According to TorontoRespAgent.com, buying life insurance can also provide you with coverage of taxes upon death, as well as giving you a tax-sheltered investment portfolio. 5 – Make Money Off of Wise Investments Many people desire to invest a large amount of money into a particular investment opportunity, but don’t have the funds to do so. When you are given a decent sized tax return, you may want to consider investing it in a sound investment option. This way, you can get your money to work for you, and provide you with monthly dividends through profits from the investment.
Spend Your Tax Return Wisely
There are many ways to spend a tax return. Just make sure the way you are spending it will provide you with a good return on investment, or else provide you with other benefits, such as tax shelters and government grants. When in doubt, get in touch with a finance professional to help you weigh your options.
Sandra @ TorontoRespAgent.com.