- Days left

5 Surprisingly Smart Ways to Blow $1,000 of Your Tax Refund

×
Tax refundBy Cameron Huddleston, contributing editor, Kiplinger.com

I want to share a poem my 7-year-old daughter wrote last night:

I have had no money for a while
Then for my birthday someone gave me 1,000 dollars.
Let's go buy all we want!
Oh, now we have no more money.


Plenty of you have probably received -- or will soon -- checks for that amount from Uncle Sam. In fact, the average refund has been nearly three times that amount for the past two years. It's tempting to spend on something you really want -- say a big-screen TV, tech toys or new clothes -- but you'll be better off it you put that money to work for you.

Here are five good uses of your tax refund (or birthday check, or any other small windfall). And check out our 10 Smart Uses for Your Refund slide show for more ideas.



If you had $1,000, how would you spend it? Share your ideas in the reader comments box below. (And, in case you're wondering, I've never given my daughter $1,000 for her birthday.)

Get 100 of our top money-saving tips by downloading the new iPad app or purchasing the PDF version.


More from Kiplinger


Increase your money and finance knowledge from home

Introduction to Retirement Funds

Target date funds help you maintain a long term portfolio.

View Course »

Introduction to Preferred Shares

Learn the difference between preferred and common shares.

View Course »

TurboTax Articles

Will Medicare/Medicaid be Impacted by ACA?

The Affordable Care Act put in place significant tax-related programs that impact Medicare and Medicaid, such as increased Medicare taxes on earned and unearned income for high-wage earners, and Medicaid changes that increase the number of insured individuals. Establishing whether you are affected by the ACA-imposed taxes, or are eligible for certain health programs that fall under the Centers for Medicare and Medicaid Services, is determined by filing your income tax.

8 Things You Think Are Tax Deductible That Aren't

There?s a fine line between looking to save money on your taxes and taking deductions that will raise eyebrows at the Internal Revenue Service. Some taxpayers are tripped up by expenses that they assume are tax deductions, but don?t qualify under IRS guidelines. Here are a dozen items that can lead to unpleasant surprises in case of an audit.

Essential Tax Forms for the Affordable Care Act

The Affordable Care Act (ACA), also referred to as Obamacare, affects how millions of Americans will prepare their taxes in the new year. The law now includes penalties for all who haven?t obtained health insurance -- and those penalties are expected to be paid at tax time. The ACA also provides tax credits to help people pay for insurance, and you can claim those credits when you file your taxes. The Internal Revenue Service (IRS) has introduced a number of tax forms to accommodate the ACA.

How to Determine if You Have Minimum Essential Coverage (MEC)

The Affordable Care Act, also known as Obamacare, requires most Americans to have health insurance that meets a government standard known as "minimum essential coverage," or MEC. Whether your insurance qualifies as MEC depends not on the plan itself, but on how you obtained your coverage.

What are 1095 Tax Forms for Health Care?

In 2014 the Affordable Health Care Act, also known as Obamacare, introduced three new tax forms relevant to individuals, employers and health insurance providers. They are forms 1095-A, 1095-B and 1095-C. These forms help determine if you need to comply with the new shared responsibility payment, the fee you might have to pay if you don't have health insurance. For individuals who bought insurance through the health care marketplace, this information will help to determine whether you are able to receive an additional premium tax credit or have to pay some back.

Add a Comment

*0 / 3000 Character Maximum

23 Comments

Filter by:
Wayne Bradshaw

Many People like the Louis Vuitton Handbags very much and would consider that the Louis Vuitton Company come from In italy , in fact it is born from paris in France.So you unlidely see real Louis Vuitton Outlet in other city except france. But please don't worry about that ,if you want to buy a cheap louis vuitton items ,you could search the Louis Vuitton Online in the internet,you can get the cheap louis vuitton handbags anywhere.

May 05 2012 at 11:49 PM Report abuse rate up rate down Reply
grampz05

The smartest thing is not have a refund coming. That way you have use of your money all year long. Why have the government hold your money for over a year when it's just sitting there doing nothing.

April 01 2012 at 10:27 PM Report abuse rate up rate down Reply
larry

One of the smartest things to do is get a Suze Orman "smack down" on your debt and finances and the best part is: it won't cost you a thing !!!

April 01 2012 at 9:14 PM Report abuse rate up rate down Reply
aeturnus

The smartest thing to do with the $1000 is to stash it in an "emergency fund". If you did that every year, you would soon have a pretty comfortable "nest egg". Either that, or adjust your withholding...if your return is that big you are actually just "shorting" you paycheck and giving the government an interest free loan.

March 26 2012 at 9:46 AM Report abuse rate up rate down Reply
1 reply to aeturnus's comment
larry

Great advice, especially for those individuals that find it hard to save money.

April 01 2012 at 9:09 PM Report abuse rate up rate down Reply
summerctz

HA! I wish I was getting ANY money back. I owe more and I was/am unemployed. Go figure...............

March 26 2012 at 8:00 AM Report abuse +1 rate up rate down Reply
Danny

I keep $500.00 to $700.00 in my desk drawer. When I need money quick I loan it to myself . When I get paid I pay the dawer back. I always hae money of the books and on hand when a bargan pops up unexpectedly. It is nice to have a little cushion ,but you can cheat yourself and not pay it back or you will end up with nothing again.

March 26 2012 at 5:48 AM Report abuse rate up rate down Reply
Lisa

MIne gets thrown in the bank to help pay my yearly extortion bill, better known as school taxes.

March 25 2012 at 9:36 PM Report abuse +2 rate up rate down Reply
1 reply to Lisa's comment
larry

Lisa----I'm with you although my city also takes a bundle for "Parks and Recreation" and to make million dollar bike lanes instead of improving the streets and filling the "pot holes" for the 99.8% that drive a car.

April 01 2012 at 9:12 PM Report abuse rate up rate down Reply
Cindy

lame

March 25 2012 at 7:21 PM Report abuse rate up rate down Reply
IraRadnick

$1,000.00 is chump change in comparison to an amount that would be significant enough to warrant writing an article of interest. Oh yeah, don't forget this little surprise - That refund check from IRS is subject to income tax on your next filing, so about 25% or more of that big $1,000 is going to evaporate courtesy of your federal and state income tax load - so now how cool do you feel? Gee, what remains may be enough for 6 or 7 fairly nice dinners out with a bottle of wine. Or you could fill your SUV's fuel tank about 12 times. If your vehicle has a timing belt that needs to be replaced (60,000 miles for affected makes/models) you could do that. Or you could make the smart play and pay down your credit card debt and call the bank to ask them to lower your credit line to prevent getting trapped again (nah, that is way to smart a thing to do, eh?). So $1k is a fairly nice chunk of cash to play with, but until you get into a $10,000 windfall there really is not a lot to talk about that could be life changing unto itself. At that, even $10k can go pretty fast if restraint is not exercised, as there are plenty of folks that would love to help you spend it (new car with a nice down payment anybody?) In my case even $10,000 would not excite me unless it was truly unencumbered of income tax. Then we could talk about making an investment somewhere.

March 25 2012 at 11:50 AM Report abuse -1 rate up rate down Reply
1 reply to IraRadnick's comment
johnk01000

Paying down a credit card is good... but think twice about asking the bank to drop your credit limit. It can lower your credit rating as well. Instead just show restraint and dont get yourself in the credit card game again. Better to take all your credit card debt and with the help of a loan calculator put all your credit cards on an fasttrack repayment plan. Just a few dollars more than the minimum can and will take YEARS of the payback the credit card companies charge.

March 26 2012 at 10:28 AM Report abuse rate up rate down Reply
hughembriaco

The smartest thing anyone could do with $1000 is to spend it getting a 15 minute investment consultation from me. It will change your life.

March 25 2012 at 1:27 AM Report abuse -3 rate up rate down Reply