According to a TD survey, six in ten taxpayers can expect a tax refund this year. “It is tempting to treat your tax refund as ‘free money’ however with a little bit of planning you might be able to make more of an impact with your dollars,” said Linda MacKay, Senior Vice President, Retail Savings and Investing, TD Canada Trust. The top three ways Canadians plan to use their tax refund, are: paying off credit card debt, contributing to an RSP or TFSA and topping up an emergency fund. MacKay says there are many options when it comes to deciding what to do with a tax refund:
TD’s Top 10 Ways to Turn Your Tax Refund into Smart Money
1. Build your nest egg: Whether it’s $10 or $100 or $1,000, use your refund to contribute to your TFSA and save your tax refund tax free. RSPs can be claimed as a tax deduction on next year’s tax
2. Reduce or eliminate debt: Use that extra money to help pay off debt.
3. Be prepared: Save for that rainy day by upping your emergency fund – or creating one.
4. Invest in your children: Contribute to your child’s RESP – the Canada Education Savings Grant will give you 20 per cent on the first $2,500 you save in your child’s RESP each year.
5. Invest in yourself: Enrol in training or a professional development course that can help boost your career.
6. Invest in your health: Get that gym membership to improve your overall fitness, purchase a wellness tracker to set and achieve personal fitness goals, or spend a little bit more at the grocery store
purchasing healthier food options.
7. Create some home cents: Put money towards mortgage payments or a down payment on a home.
8. DIY: Start a home improvement project to create your happy place while also increasing the value of your home.
9. Make some upgrades: Switching to energy-efficient appliances can help save money on utility bills.
10. Help others: Giving back is a great feeling so consider donating to a charity or a cause that’s important to you. Many donations are eligible for a tax credit.