Seven Ways to Use Your Tax Refund

Julie A. Marshall |
Posted on Mar 01, 2018

According to the Internal Revenue Service (IRS), more than 70 percent of the nation's taxpayers received a tax refund averaging nearly $3,000 in 2017 and will get a similar - or even larger amount - in future years because of the Tax Cuts and Jobs Act signed into law on December 22, 2017.

If you are anticipating a refund this spring, review the following tips to make the most of this money.

  • Save for emergencies. More than 60 percent of Americans are not prepared for unexpected expenses. You can prepare by opening or adding to a savings account that serves as an emergency fund. Ideally, it should hold about three-to-six months of living expenses in case of sudden financial hardships like losing your job or having to replace your car.
  • Pay off debt. Pay down existing balances either by chipping away at loans with the highest interest rates or eliminating smaller debt first.
  • Save for retirement, your child's education, or future health expenses. Open or increase contributions to a tax-deferred savings plan like a 401(k) or an Individual Retirement Account (IRA). Your bank can help set up an IRA, while a 401(k) is employer-sponsored. Look into opening a tax-advantaged 529 education savings plan to ensure school expenses will be covered when your child reaches college age. Or, save for future health expenses with tax-free dollars by investing in a Health Savings Account (HSA).
  • Pay down your mortgage or student loans. Make an extra payment on your mortgage or student loans each year to save money on interest, while reducing the term of your loan(s). Be sure to inform your lender that your extra payments should be applied to principal, not interest.
  • Invest safely with U.S. Savings Bonds or municipal bonds. The U.S. Treasury allows for savings bonds to be purchased using your tax refund for as little as $50. Savings bonds earn interest for a maximum of 30 years.
  • Invest in your current home. Use your refund to invest in home improvements that will pay you back in the long run by increasing the value of your home. This can include small, cost-effective upgrades like energy-efficient appliances that will pay off in both the short and long term - and with tax credits as long as Congress continues to renew the program.
  • Donate to a local charity. This benefit is two-fold: Giving to charity will make a difference in your community, and you can claim the tax deduction if you itemize on your tax return.

It is also important for lower-income workers to file a tax return - even if their income is too low to trigger any federal tax liability-in order to claim the Earned Income Tax Credit (EITC). EITC is a benefit for working people who have low-to-moderate income. A tax credit means more money in your pocket. It reduces the amount of tax you owe and may give you a refund. Find out if you are eligible for EITC by visiting the IRS website at .

Are you expecting a tax refund this year? If so, keep these tips in mind and use your tax refund to help yourself, your family, or your community.

Julie A. Marshall
Assistant Vice President/Community Banking Manager for ACNB Bank in Arendtsville, Bendersville and Biglerville