The New York State Department of Taxation and Finance, and the NYS Division of Consumer Protection, are highlighting six ways that the 7 million New Yorkers who receive tax refunds can make smart decisions with their money:
- Repairs and home improvements – If you’ve never had the extra money to build a new deck or put in those new kitchen cabinets that you’ve always wanted, now might be the time. In addition to improving the look and functionality—and possibly increasing the overall value—of your home, many home improvements qualify for tax benefits as well; any project considered a capital improvement is exempt from sales tax.
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Education – To earn that promotion or switch career paths, you often need additional training and education. You can put your tax refund toward college courses to help you in your career. You could also invest in a 529 College Savings Plan to help pay for your child’s future education.
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Fund for emergencies – To prepare yourself for unexpected expenses, financial experts suggest having at least three months’ worth of savings to cover all your fixed expenses, including mortgage or rent, utilities, food, and insurance.
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Upcoming expenses – If you’re planning to make a significant purchase in the coming months, such as a new appliance or car, you can use your tax refund as a down payment to reduce—or eliminate—monthly bills.
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Nest egg for retirement savings – Start saving now for your retirement. There are plenty of options, including adding your refund money to your 401(k). If your employer doesn’t offer a 401(k), then consider opening an Individual Retirement Account (IRA). The sooner you start saving for retirement, the more time your money has to grow.
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Debt – Your tax refund can put a sizable dent in—or even erase—your credit card debt. If you pay it off now, you won’t continue to pay interest charges. Your tax refund can also help to pay off any loans you have earlier.
“Whether you’re looking to pay off some debt, bolster your retirement account, or plan for an unforeseen expense, making a smart financial decision with your refund now can better prepare you for the future,” said New York State Commissioner of Taxation and Finance Jerry Boone.
“Foresight and education are keys to being a smart consumer,” said Acting Secretary of State Rossana Rosado. “These suggestions provide New Yorkers with some of the options available to help them secure a better financial future.”
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