Will you receive a tax refund this year? Experts have ideas about how to spend money
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During the ongoing 2025 tax filing season, the Internal Revenue Service lifted millions of tax refunds.
Over 8 million people received tax refunds during the 2025 season on February 7th, IRSthese refunds averaged $2,065 each.
Getting taxpayers reimbursed, tackling their debts, stealing money from emergency funds and helping them retire will take some good paths to using those funds, experts said.
Tax Tips: Don’t file until you have retrieved all the documents you need
debt
Jonathan Ford Jr., president of JFJ Advisory Services, said that for those considering using tax refunds, paying high-profit debts will “be one of my number one recommendations.” He said.
“Unpaid credit card liabilities can be a really good target for repayment, especially those funded at double-digit percentage rates, personal loans, personal loans, but above the current market rate. There is,” he told Fox Business.
Meanwhile, tax strategy company KDA and Inc. Karla Dennis, CEO and founder of the company, said Tackling. High credit card debtspecifically, it could be a good chance of using someone’s tax refund.
According to the Federal Reserve Bank of New York, at the end of December, US household credit card debt totaled $1.21 trillion at the end of December.
Woman holding a credit card. (istock / istock)
“Their debt costs are eating up the money they can spend on something else, so if possible I would definitely pay off all of my credit card debt.” Dennis said.
Emergency Fund
“The next thing to do is make a refund is to make sure you have at least $1,000 in emergency cash, emergency money,” Dennis said.
Emergency funds “Give people the ability to buy things in emergencies,” she said.
“If you can’t earn rent again this month, you can withdraw it from the emergency fund,” Dennis continued. “When consumer goods, especially food prices, can use emergency funds for that, but they really need to be needed for emergencies types. Many consumers can save money. “Ahhh, let me use this money to want.” You really need it. ”
Record high inflation has led to consumer prices skyrocketing, and many US households are unsure about emergency savings. (istock / istock)
Ford said he would put the money in an emergency fund, which would likely be a “(his) top” recommendation for tax refunds, especially if someone doesn’t have it yet or fully funded.
a Recent US news survey This indicates that 42% of Americans lack one.
“The emergency fund is the number one thing I have to look at before I can make plans and make sure I’m building emergency savings,” he explained. “The advantage of having emergency funds is that you can only sleep at night and if you have a $1,000 or $2,000 cost pops up, you can pay that fee and other aspects of financial life. will not be interrupted.
He said he told his clients to try and leave “three to six months” in the emergency fund in their socks in order to “provide a little deeper safety net.”
retirement
Both Ford and Dennis said that tax refund recipients should consider setting up some set up for retirement.
“If we set up an emergency fund, we’ll invest a portion of that money into an IRA or Roth IRA, even if we only put in a few hundred or $500,” Dennis told Fox Business. “I think consumers need to know that investments increase over time. They may have a full contribution of, say, $7,000 or $6,000, to fully fund their retirement accounts. Not available, but if you can start Building a nest egg Well, it puts a little bit of it, so I think it’s very helpful. ”
Ford said he frequently tells his clients to invest in Ross IRAs.
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“In Ross, you’ll just pay taxes on the money you donate, so there’s an additional tax savings,” he explained. “On the other hand, in the traditional ones, you pay the money you withdraw so you’re receiving taxes on growth as well, but you’re not in Ross.”
Businessman in suit holds piggy bank. Financial savings concept (istock / istock)
In 2023, more than 42% of US households had some form of IRA, according to a report by the Institute of Investment.
Should tax refunds be used for anything other than finances?
Once the tax refund arrives, there may be a desire to use it for something other than improving your finances.
“I recommend, and I always recommend myself. Take a small percentage of that, and maybe under 25%. “Ford said Fox Business. “I think buying something to make yourself happy is an important step in ensuring you are able to keep your financial goals on track.”
“It depends on what your finances look like,” Dennis said.
“Tax refund money is your money that the government has allowed to maintain throughout the year,” she said. “You really need to establish a budget and within your budget, if you can afford it, I think a lot of taxpayers are wrong. This comes to me. It’s extra money.’ No, it’s your money that the government has maintained. ”
How long does it take for the IRS to distribute the refund?
The time it takes to receive a tax refund may vary depending on how you submit your tax, according to the IRS.
Taxpayers leave thousands of dollars on the table at the time of tax: Experts
Taxpayers who filed electronically usually got them within 21 days, the agency’s website said. For revised or paper tax returns, the refund usually takes more than four weeks.
IRS There is a web page Where taxpayers can check the status of their refunds.