Will you be getting a tax refund this year? If so, you're not alone. The Internal Revenue Service anticipates more than 7 in 10 taxpayers will receive a refund in 2016. Last year, the average refund was $2,797. That's a sizable amount.
Do you already have plans for that refund money? If so, you might be like most taxpayers and use your refund to pay down debt, according to a survey from GOBankingRates. Or you'll use the money to increase your savings. Or you might yet be undecided.
If you are a working adult looking to get ahead in your career, here are 3 other ways to make the most of your tax refund.
1. Take college classes
Americans are in the habit of using refunds towards savings or paying down debt. You can take advantage of both by investing in low-cost college courses, enrolling in those that can help you avoid taking on student debt and help you save on your college degree. Online courses are a smart choice if you are ready to start--or complete--your degree to advance your career, an option you need to think about if you plan on working while going back to school.
2. Start, or accelerate, your college fund
If you've been waiting for the right time to earn your degree, 2016 might be it. The number of colleges that work with alternative credit providers has exploded. At StraighterLine, for example, there are nearly a hundred partner colleges that guarantee acceptance of our courses. Using course-to-course articulation agreements, current or prospective students can map out exactly which StraighterLine course will be accepted for credit into their degree program. With our $99 a month membership fee, and courses starting at $49, your refund could easily help you complete a semester, or a year's, worth of courses.
3. Pay off high rate student loans
Unless you financed your entire degree with federal student loans, your student debt is taking on a high amount of interest for every month that you don't pay off the balance. If your refund can cover any private loans, or help pay off the interest on any loan you've taken out while in school, use it so you can reduce the burden of student debt.
If you generally get a refund each year, you might want to consider adjusting your tax withholdings so you can free up money in your paycheck to avoid taking on more student loans. Speak to your accountant or HR department to see if this change makes sense for you. Now might also be the time to enroll in a course in personal finance or accounting that can help you earn credit for your degree -- and strengthen your financial knowledge for the future.
And another thing. If you are attending a college now, ask its administration whether the college offers a service for helping you fill out your tax return. Some colleges offer this service to their students, and if it is happening at your school, you’d be wise to take advantage of it.