Will your family receive a tax refund this year? The average tax refund is around $2,800 and slightly more for direct deposit refunds. Even if your refund is more or less than the average, we have a few tips to make your money work for you.
Military families encounter fluctuations in household income for a variety of reasons including: deployment and training incentives; bonuses; loss of income from a spouse’s job; or cost of living adjustments after a military move. A tax refund may provide the funds you need to help account for the changes in household income. Here are some tips to consider:
- Review your emergency savings funds. Do you have money set aside for unexpected expenses? Out of pocket costs for an upcoming Permanent Change of Station (PCS)? Consider starting or adding money to a designated emergency savings account.
- Pay down debt. Use your refund to pay down or pay off a high interest credit card.
- Contribute to your retirement plan. An extra contribution to your service member’s Thrift Savings Plan (TSP) or your own retirement account can go a long way.
- Deployment savings. If your service member is deployed, consider adding your refund to the Savings Deposit Program. A total of $10,000 may be deposited each deployment and will earn 10% interest annually.
- Save for college. If you have children, you can contribute to a college 529 savings plan. Going back to school as an adult? You can put your refund towards a 529 plan for yourself, too.
- Don’t spend your refund before your receive it. Wait for your refund to arrive before you spend the funds. You can track the status of your federal refund online.
Before you are tempted to spend the extra money on a shopping spree, review your current financial situation. It may be helpful to talk to a financial counselor at your local military installation or through Military OneSource to help you decide how to put your refund to good use.
How will you use your tax refund?