Early tax filers may get a treat this year. If you’ve filed your taxes for 2020, you could be getting one of the “bonus checks” or “plus-up payments” the IRS distributed in the past two weeks, according to MoneyWise.
You may also be due to receive your third economic impact payment this week, as the IRS has been sending payments through the month of April, according to an IRS.gov press release. The press release states that a seventh batch of nearly 2 million Economic Impact Payments from the American Rescue Plan began processing April 23, with an official payment date of April 28. Some people may have seen the money in their account, marked as pending, prior to April 28.
The IRS says these funds total $4.3 billion across nearly 2 million payments.
Some people, however, who already received their third check could be receiving a “plus-up” payment if their economic situation changed between 2019 and 2020. If their 2020 tax return shows a new child or dependent or if your income dropped, you could be getting more money.
This is especially true if you didn’t qualify for the full $1,400 in the third round based on 2019 returns, but you do based on your 2020 filings, or if you got married in 2020 and filed a joint return, with adjusted gross income under $150,000 combined.
If you hadn’t been required to file taxes in previous years but did in 2020, you may also have more money coming, the IRS says.
While you may be tempted to book a trip for this summer as lockdown measures are lifted worldwide, don’t rush to spend those funds without taking a close look at your financial situation first. It’s okay to treat yourself, but there may be better ways to spend that money.
Pay Down High Interest Credit Card Debt
Don’t just toss money at your highest interest credit card, though. Instead, if your credit is good, apply for a credit card with an introductory APR of 0%. Consolidate as much of your debt as you can, and then begin paying down what’s left.
You can opt for paying off the smallest balances, first, if you want to experience a sense of accomplishment as you watch your debt dwindle. Or pay off the cards with the highest interest first, to save even more money faster.
Invest in Stocks or Crypto
If most of your debt is paid off, consider investing money into stocks or crypto currency. Consider the investment a long game, as day trading isn’t for the faint of heart. Look for an app like Stash or Acorns that lets you invest in fractionals, which are partial shares of pricey stocks.
Invest in Yourself
Are you thinking of starting a business to hedge against future income cuts or to tuck away more money into an emergency savings account? Put the extra money towards a business website, a course to learn a new, marketable skill or inventory for materials to make and sell crafts on Etsy.
Whatever you opt to do with the funds, the best way to spend the money is in some way that will make your life better in the future. Whether you’re improving your mental health with a getaway or improving your financial security with less debt or more savings, use the money to kickstart a better future.
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