People all across America are opening their mailboxes with that unmistakable grin on their faces. Finally, it’s not just bills in that metal box. There’s a paycheck in there and it’s from Uncle Sam! They grab that holy grail of a parcel, hold it up in the air and shout, “This money is going straight to savings!”
….Errrr, maybe not.
More than likely, they’ve already found out how much they’re getting back, spent it 3 times over with their credit cards, and now they’ll spend this money foolishly on something else (you know, instead of actually paying for the dumb thing they bought when they heard they were getting the refund).
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10 Ways to Earn Money With Your Tax Return Dollars
But YOU are different. YOU’RE reading this blog because you want to be fiscally wise and are therefore thinking differently about this money. What if I told you we could earn money with your tax return dollars?
Make money with money? Ohhhh yeah, baby!
Now wipe that saliva off your lower lip and let’s start breeding those Benjamins!
Let’s say you’ve got $3,000 in credit card debt (not bad considering the average balance-carrying household has owes $16,000) and your tax return just magically happens to be $3,000. Over the course of just one year, you could save $600 if you paid off the balance today! That’s a pretty good return on investment if you ask me!
2) Sell Your Under Water Car
Here’s the excuse I hear all the time, “Yeah, I probably never should have bought this car, but now I’m under water on it so I can’t possibly sell it.”
Now’s the time to ditch that excuse. Use your tax return, pay down your insane $25,000 car balance so that you no longer owe more than it’s worth, and sell it so you can buy a dependable $3,000 car with NO PAYMENTS.
3) Start a Small Business
You don’t need $100,000 to start a business these days. Heck, you don’t even need $5,000.
With $3,000 or less (typically much less), you could start your own:
- Lawn mowing business
- Car detailing business
- Home cleaning business
- House painting business
- Driveway and deck power washing business
….and earn a thousand dollars or more each month! Tack those earnings onto your day job income and you could finally be in the driver’s seat financially!
Find out how to start these businesses and learn about 9 more in the article, “14 Cheap Business Ideas You Can Start Today“.
My personal favorite! Starting a blog. I started this blog in 2010 and it’s helped me earn more than $100,000! Isn’t that just crazy?! I know it sounds like a pipe dream, but if I can do it (believe me, I was clueless when it came to blogging) then you can too!
All you need is $24 to get started through iPage. This step-by-step guide will help you:
- Come up with a fantastic domain name
- Sign up through iPage with no additional add-ons (the free guide will show you exactly what you need and nothing more)
- Set up your site to look professional in just 15 minutes
5) Invest in a Roth IRA
Want to earn money with your tax return dollars? Then why not start a Roth IRA? Your return is in after-tax dollars, so an investment into a Roth IRA will grow and never be taxed again, even at withdrawal in your old age.
Let’s say you receive that $3,000 tax return and put it all into a Roth IRA. If you add nothing else to it and earn 10% each year, guess how much you’ll have 30 years from now? Believe it or not, it’ll be $50,000!
Ready to invest? Check out Motif Investing. It’s cheap, easy, and they typically have promotions for new investors on their page. Want help signing up? Check out this free tutorial I created: Step-by-step sign-up instructions – Motif Investing.
6) Invest in Your Kids’ College Funds
Want to earn money with your tax return dollars? How about earning money for your children? If you’re out of debt and have an emergency fund set up, then it’s time to put some money away for your kids. It doesn’t have to cover their entire education, but what if you could save up and help them with half of their tuition? That would feel pretty good right?
The question you’re going to ask is, “With rising tuition costs and the unknown growth of their college fund, how the heck will I know how much to invest??”
Glad you asked. I made a calculator for that exact question a few months ago. 😉
Here’s the article: Free College Investment Calculator, It Costs More Than You Think
Just enter your:
- child’s age,
- the amount you already have saved,
- and the current tuition costs.
That’s it! The calculator will take care of the rest!
7) Put It In The Bank and Earn 3% Interest
Some savings accounts earn less than 0.1%. Please don’t put your money here. You can do better with a credit union checking account. You might even be able to earn 3% interest on $15,000! That’s $450 a year of free money!
According to Bankrate, there are three banks that are paying 3% on $10,000 or more:
- Consumer Credit Union
- Great Lakes Credit Union
- Lake Michigan Credit Union
All you have to do is set up a regular deposit there and use your debit card regularly. Check out the other top banks in the table below:
Find one of these banks, deposit your $3,000, and earn money with your tax return dollars! Now THAT’s pretty easy!
8.) Buy Cheap Items and Resell Them
I’ve done this quite a few times, especially when I was younger. While at garage sales and thrift stores, I would inevitably see items that were selling for far less than I knew other people would pay for them.
- Entertainment centers,
- stereo systems,
- and exercise equipment to be specific…
So why not buy them, list them online, and make a quick $20-$50 here and there?
Just think of how much you could earn with a $3,000 tax return! By purchasing a few dozen garage sale items, you might even be able to double it!
Want to know what to look for at those thrift stores and garage sales? Check out this great article from GarageSaleCoach.com: What to Buy at Garage Sales
9) Invest in Real Estate
Obviously you’re not going to be able to purchase an entire house with your tax return, but you could always boost your real estate fund with it!
Real estate is one of my favorite investments for the following reasons:
- You have more control of a rental house than you do a share of stock or mutual fund
- Rentals can easily net 10% earnings each year (we’re netting $11k a year on a $90k investment)
- It’s an appreciating asset, but you can actually depreciate it on your taxes
- When we sell the property, we’ll only owe capital gains tax and not earned income tax
Liz and I purchase our real estate with cash. It takes quite a lot of time to save up for the first place, but then the 2nd property is purchased faster than the first, and the 3rd faster than the 2nd!
Want to see how quickly you could rack up rental properties with cash? Check out this Free Rental Investment Calculator!
10) Invest in Your Health Savings Account (HSA)
I firmly believe that everyone should max out their HSA accounts, especially if you’re young. Singles can contribute up to $3,400 and couples can contribute $6,750. Want to earn money on your tax return dollars? Then stash it in your HSA account.
Here’s why I’m such a big fan:
- You’ll never pay tax on this money…EVER
- It stays in your account forever (unlike that dumb FSA)
- Many companies contribute money for you
- You can invest the money while it’s in your HSA (and never pay taxes, not even on the earnings!!)
- At the age of 65, you can use the money for anything, even if it’s not health related
Want more info? Check out the full write-up here: 5 Monster Benefits of an HSA
Will You Earn Money With Your Tax Return?
So what’s it going to be? Are you going to squander your tax return like the rest of America? Or will you actually be wise with it and pay off debt, save for a rainy day, or invest for your future? If you read up to this point, I’m just guessing that you’re going to do awesome things with your money. So kudos to you! I can’t wait to hear what you’ll do with your tax return dollars!
What will it be for you? How will you earn money with your tax return dollars?