What to do with your tax refund: 4 ways to spend it

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If you have not already paid all use tax due to the California Department of Tax and Fee Administration, you may be able to report and pay the use tax due on your state income tax return. See the information below and the instructions for Line 91 of your income tax return. A variety of California tax credits are available to reduce your tax if you qualify. To figure and claim most special credits, you must complete a separate form or schedule and attach it to your Form 540. The Credit Chart included in this booklet describes the credits and provides the name, credit code, and number of the required form or schedule.

If You File Electronically

In general, for taxable years beginning on or after January 1, 2015, California law conforms to the Internal Revenue Code (IRC) as of January 1, 2015. However, there are continuing differences between California and federal law. When California conforms to federal tax law changes, we do not always adopt all of the changes made at the federal level. For more information, go to and search for conformity.

8 Smart Ways To Use Your Income Tax Refund

But there are others that come out of left field — like your child being hit in the mouth with a baseball and needing emergency dental work. Even if your emergency savings are close to zero, any amount you start with will help. Also, your tax refund could amount to a week’s — or even a month’s — worth of expenses. The whole world experienced one in 2020, when COVID-19 caused great financial hardship for many people.

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This relationship indicates that tax systems that are harder to comply with when filing taxes are more likely to be challenging throughout the process. This view is supported by a study examining VAT administration refund mechanisms in 36 economies worldwide.17 Even in economies where refund procedures are in place, businesses often find the process complex. The study examined the tax authorities’ treatment of excess VAT credits, size of refund claims, procedures followed by refund claimants and time needed for the tax authorities to process refunds.

8 Smart Ways To Use Your Income Tax Refund

One benchmark is to save between three and six months’ worth of living expenses in an emergency fund. According to the IRS, “Taxpayers receive a refund when their total tax payments are greater than the total tax.” That means you may receive a refund from the government if your tax payments or withholdings exceed the total amount you owe. If you’re waiting for a tax refund, you may be counting the days ’til it arrives. But you may not have to wait for long—especially if you submit your tax return electronically.

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If in the future you’d like a smaller refund, she says you could increase your withholding allowances. Need to find a brokerage to open an IRA or other retirement account? We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate follows a strict
editorial policy, so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions.

  • Enrolled tribal members who receive per capita income must reside in their affiliated tribe’s Indian country to qualify for tax exempt status.
  • Having three to six months’ worth of expenses saved up is typically the go-to rule for anyone in the personal finance industry.
  • RDPs filing as married/RDP filing separately, former RDPs filing single, and RDPs with RDP adjustments will use the California RDP Adjustments Worksheet in FTB Pub.
  • Paying down debt is the top priority for Americans who expect a tax refund in 2023, according to a recent Bankrate survey.
  • 3 “Here’s how many millennials actually have enough emergency savings to last 3 months,”, May 20, 2019.

There are a few methods that you can use to reduce your taxable income. These include contributing to an employee contribution plan, such as a 401(k), contributing to a health savings account (HSA) or a flexible spending account (FSA), and contributing to a traditional IRA. Those who don’t have a retirement plan at work can get a tax break by contributing up to $6,500 ($7,500 for those 50 and older) to a traditional individual retirement account (IRA) in 2023 (up from $6,000 and $7,000, respectively, in 2022). Taxpayers who do have workplace retirement plans (or whose spouses do) may be able to deduct some or all of their traditional IRA contribution from taxable income, depending on their income. For 2023, the zero rate bracket for long-term capital gains applies to taxable income up to $89,250 for married couples filing jointly (increased from $83,350 in 2022) and $44,625 for single individuals (increased from $41,675 in 2022).

Following is a breakdown of how much time it generally takes to receive a tax refund depending on how the return is filed and which method is chosen to receive the refund. One of the biggest questions many people have about their taxes is how long it takes to receive a tax refund. In general, you should receive your refund anywhere between eight days and two months from when the IRS accepts your return, depending on how you file and choose to receive your refund. But understanding the refund process can help you know what to expect as you file your taxes and wait to receive your refund. If any changes are made to your tax return, the IRS says you’ll receive a notice and more information about the changes. Tool could also provide you with an updated amount and an explanation of the changes.

The key distinction between using your tax refund for investing in assets like stocks versus using it to save is the amount of risk involved. Stocks are volatile in the short-term, so only invest the money if you’re confident you won’t need it for the next five years or so. If you may need the money, a high-yield savings account is likely a better choice. Millions of Americans will receive a tax refund when they file their taxes this year, giving them a nice cash boost that can help improve their financial lives. The average tax refund is $2,933 as of March 17, according to the IRS, so the money taxpayers receive can be substantial.

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