How to Maximize Use of Your Tax Refund


How to Maximize Use of Your Tax Refund


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Tax season is upon us, and many people are working on their returns, anticipating a tax refund. If you’re looking forward to a refund, you may want to find ways to put your refund to work. Experts are predicting that Americans may see smaller refunds this year, due to the expiration of pandemic tax credits and other benefits. Given this possibility, embrace new ways to thoughtfully use your tax refund.

No matter the size of your tax refund, you can make a smart plan for it. If you don’t need the funds for necessities, you may be tempted to use it as “found money” and spend it on a nice vacation with the family or a single large splurgy purchase. While this can feel good in the short term, financial planners recommend having a plan for your refund that makes it work for you long-term.

One option that can put your refund to work for you is investing it in a 529 education savings account like The Education Plan®. If you take this option, you’ll see the refund grow over time, and you can feel good about investing it in a loved one’s future.

Tax Benefits Help Your Refund Grow More

If you choose to invest your refund in a 529 plan, there are tax benefits in place that can help it grow even more. Earnings in a 529 account are not subject to federal taxes as long as they are used for qualified educational expenses, including tuition, room and board, books and more. And many states also offer additional tax benefits. If you live in New Mexico, you can deduct 100% of contributions to an account with the Education Plan from your state income taxes. This can represent a significant tax savings every year. You can see every state’s tax benefits for 529 contributions here.


Others can contribute their tax refunds to your child’s 529 account as well. Grandparents, may see this as a smart way to contribute to their grandchild’s future education while potentially receiving tax benefits themselves. Aunts, uncles, family friends and godparents can all contribute and may receive tax benefits as well.

It’s easy for friends and family to make a gift into a 529 account with The Education Plan with Ugift. You can set up a unique code to share with friends and family. The code allows them to easily contribute directly into the account.

To set up your Ugift code, log in to your account with The Education Plan.

Financial Literacy

Your minor child may receive a tax refund as well. You can encourage them to start making smart money choices early by investing it in their 529 account for their future education. This offers an excellent opportunity to start having conversations about money and financial literacy with your children, no matter how old they are. Let them know that these savings will continue to grow and ultimately help them receive a higher education degree, complete a certificate program, or apprenticeship program with a smaller debt load. Investing your own tax return in their account, and sharing that you did, is another way to be a role model for smart financial choices.


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The Education Plan® and The Education Plan® Logo are registered trademarks of The Education Trust Board of New Mexico used under license.

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For more information about The Education Plan, call 1.877.337.5268 or view the Plan Description and Participation Agreement, which includes investment objectives, risks, charges, expenses, and other important information; read and consider it carefully before investing.

Please Note: Before you invest, consider whether your or the beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in that state’s qualified tuition program. You also should consult a financial, tax, or other advisor to learn more about how state-based benefits (or any limitations) would apply to your specific circumstances. You also may wish to contact directly your home state’s 529 plan(s), or any other 529 plan, to learn more about those plan’s features, benefits and limitations. Keep in mind that state-based benefits should be one of many appropriately weighted factors to be considered when making an investment decision.

The Education Plan is administered by The Education Trust Board of New Mexico. Ascensus College Savings Recordkeeping Services, LLC, the Program Manager, and its affiliates, have overall responsibility for the day-today operations, including investment advisory, recordkeeping and administrative services. The Education Plan’s portfolios invest in: (i) mutual funds; (ii) exchange traded funds; and/or (iii) a funding agreement issued by New York Life. Investments in The Education Plan are not insured by the FDIC. Units of the portfolios are municipal securities and the value of units will vary with market conditions.

Investment returns will vary depending upon the performance of the portfolios you choose. You could lose all or a portion of your money by investing in The Education Plan depending on market conditions. Account owners assume all investment risks as well as responsibility for any federal and state tax consequences.

Ugift is a registered service mark of Ascensus Broker Dealer Services, LLC.

The Education Plan® and The Education Plan® Logo are registered trademarks of The Education Trust Board of New Mexico used under license.

All other marks are the exclusive property of their respective owners.

Not FDIC-Insured. No Bank, State or Federal Guarantee. May Lose Value.