Maximizing This Year's Tax Refund: How To Get More Money Out Of Your Money

When you file your income taxes this year, you may already be planning how to spend it. However, there are multiple investment and saving options too. In fact, there are even some programs that allow you to funnel part or all of your refund directly into investments that would increase your refund over time. While you are waiting on tax services to process all of your documents and file your tax forms for you, look into these financial planning and investment options to maximize your refund.

Roth IRAs

While some investment brokers may advise you to put your money into a traditional IRA because the gains are tax deductible, a Roth IRA is a better investment because you can withdraw as much of your funds as you need any time without penalties. Meanwhile, any gains you make on the Roth IRA have to be left in the IRA, which continues to compound interest on interest annually. This is an especially smart move since some tax services will now match you so many cents on the dollar if you open a Roth IRA by directly depositing all or part of your refund into it. It is also a good idea because then you can withdraw any amount you need in the event of an emergency and not be penalized for needing your own cash.

Bonds and CD's

While you cannot, as of yet, directly deposit money into bonds and/or CD's, these safe investments can and do compound the amount of your refund over time. CD's purchased at tax time this year will gain a certain percentage of the amount you invest by next tax season, and if left alone until maturity, can make your refund just a little bit larger. Bonds could, theoretically, double or triple your investment if you allow them to mature. Treasury bonds are a little different--you will need to invest a minimum of $1,000 or $5,000 for one bond and have to wait thirty years for maturation, but that could be one hefty chunk of change when you retire.

The College 529 Plan

Whether you choose to return to college in the future, or you want to help your kids get a jumpstart in life by paying for college, the College 529 plan is a good option for your tax refund. There are some tax services that help you funnel "x" amount of dollars from your refund directly into this college savings plan, which removes the temptation on your part to spend rather than save. There are also numerous tax benefits associated with the plan, which might be a good motivator for you to save and invest your refund.

To learn more about financial planning, contact a company like Krosnar & Griffith PC CPA.