While you may not enjoy doing your taxes, receiving a healthy refund makes it all worthwhile. Your immediate impulse might be to use that sudden windfall on something you’ll enjoy. But investing that money with the future in mind may ultimately be the better choice, and you’ll have several different options for making your money stretch further.
Support your retirement

Retiring and enjoying your golden years to the fullest is the American dream, and there’s never a wrong time to save toward that goal. Ellen Chang, writing for The Street, recommends putting your tax refund in an IRA or HSA to maximize your retirement potential.

If you have an existing Roth or traditional IRA or are looking to start one, you’ll want to consider maximum contribution limits. For 2021, that total is $6,000 for contributors under the age of 50 and $7,00 for 50 and older. If you and your spouse’s adjusted gross income exceeds a certain amount, your maximum contribution will be even less. Ideally, you should hit as close to that maximum threshold as possible to give yourself the best nest egg possible for retirement, and your tax return can help.

Contributing to a health savings account is also a smart choice because it can benefit you now and later. According to Investopedia’s Amy Fontinelle, an HSA can actually be more beneficial than a 401(k) because you’re not obligated to withdraw funds at any time, though you can no longer contribute to your plan once you enroll in Medicare. Better still, withdrawals you make for qualified medical expenses are tax-free, which means your money is untaxed both ways.

Ultimately, your tax return is your money, and it’s your choice how to spend or invest it. Weigh the options available to you and consult with your spouse or partner, and you’ll come to a conclusion that’s best for your and your family’s needs — whether those are the needs of today or tomorrow.

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