Here Are 3 Ways to Make the Most Out of Your Tax Refund |
. You can set up direct deposit into either a traditional IRA or Roth IRA account and contribute up to $6,000 in total. "If your family is financially able to do so, leveraging a tax refund to jumpstart education or disability savings is a great opportunity to support long-term goals," said Mary Morris, CEO of Virginia529 and ABLEnow.offer tax benefits that are better than using a simple savings account.
Not only can you get a tax deduction or credit for contributions , earnings grow on a tax-advantaged basis and, when you withdraw the money, it is tax-free if the funds are used for qualified education expenses such as tuition, fees, books, and room and board. Generally, you will need to have opened an account first but with many plans you start with as little as $10, Morris said. That"money can grow free from federal taxes, and an upfront lump-sum contribution may benefit from potential market gains," she added., which is another tax-advantaged savings plan, also administered by individual states, for people with disabilities and their families.
The money in ABLE accounts grows and can be withdrawn tax-free and the funds can be used for a variety of expenses, from housing to long-term health care, all without any limitations on the number of withdrawals. Using your tax refund to put a few hundred — or thousand — dollars in into one of these accounts could be"a real game changer for families that have not been able to save or plan for the future," Morris said.
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