According to the IRS, about 70% of U.S. taxpayers will receive a tax refund this year. And the average return amount will be more than $2,000.
If you’re among that 70%, your refund can feel like free money. But once you have the check in hand, it’s up to you to spend it wisely.
Of course, you can pay off bills – always a wise move. Or, you can buy something for your home that saves you money – like energy efficient windows, doors and appliances. Currently, these types of purchases even offer rebates, plus tax credits at the end of the year.
While the realities of daily life may force you to spend at least a portion of your tax refund, there are many advantages to saving the money to your Self-Directed IRA, Health Savings Account (HSA) or your child’s Coverdell Education Savings Account (CESA). These advantages include:
- Compound interest and tax-deferred or tax-free growth – depending on whether you have a self-directed Traditional or Roth IRA.
- A large tax deduction (Possibly more than $50,000)
- Asset protection from creditors
- Creation of wealth for future generations
Self-Directed HSA and CESA
- Tax-free contributions (subject to limitations) and distributions for HSAs
- Tax-free earnings and distributions for CESAs
Remember, the earlier you save, the more time your money has to compound, grow and be protected from taxes. Saving now – for retirement, health care costs and education expenses – will put money in your pocket at a time when you may need it most.
To discover more, speak with an Equity Trust Retirement Specialist today at 1-888-382-4727.
Filed under: Uncategorized on April 27th, 2010