Expecting a Tax Refund or Stimulus Check? Savvy Savers Can Put That Money to Good Use

Shot of a young couple going through their paperwork together at home

The IRS recently announced that individual taxpayers will receive a one-month federal filing extension without penalties and interest giving Americans more time to file their 2020 tax returns.1 The new deadline is extended from Thursday, April 15, 2021, to May 17, 2021.

This announcement is on the heels of the federal government releasing a $1.9 trillion economic relief package, which many eligible Americans are still waiting for in the form of $1,400 stimulus payments to individuals and married couples, and their qualifying dependents.2

Despite the extension, the IRS is still urging taxpayers to file as soon as possible, given the unusual circumstances surrounding the pandemic.1

If you’re expecting a refund and/or a stimulus check – save it! Put that money to work for your future!

Here are three ways to do that:

  1. Save for the future: If you could live on your paycheck before you receive your refund, you can most likely live on the same amount now. Simply because you can spend more, doesn’t mean it’s in your best interest! Saving even more money for your future is one of the top ways to make the most of your money.
  2. Pay down debt: While we should always be working to eliminate debt, using a tax refund to pay down debt is a great time to accelerate these efforts. The easiest way to build a positive net worth is to eliminate any credit card debt, student loan debt, etc. that stands in your way. Using this money to pay off debt will positively impact your financial future, regardless of how little or how much more you put down.
  3. Build your emergency fund:An emergency often requires people to dip into their savings, causing an even greater unexpected financial burden. Set aside this money to cover unpredictable costs that may arise. This way when your car needs a pricey repair or the water heater breaks, you’ll have a cushion to fall back on.

1 IRS.gov, “IRS Extends Additional Tax Deadlines for Individuals to May 17,” March 29, 2021

2 NYTimes.com, “What Is in the Stimulus Bill: $1,400 Checks, Expanded Unemployment and Tax Rebates,” March 23, 2021