5. Seed your million-dollar portfolio
Want to know how to become a millionaire? Begin with one tax refund at a time. Invest that money and let it grow, and you'll put yourself on the path to obscene riches — if that's your cup of tea.
For example, a taxpayer who received the $3,191 average refund in 2010, invested it and earned a 6% average annualized return would have $4,527 in that investment account today. (Side note: The actual average annual return of the Standard & Poor's 500 index was closer to 11% between Jan. 1, 2010, and Dec. 31, 2016. But let's let bygones be bygones.)
Earning $1,300 on a tax refund isn't too shabby, but it gets even better for those who committed to investing their refunds each of those six years and letting compound interest and earnings do their thing: They're sitting pretty with $28,121 from savings and interest. Flash forward 20 years and the disciplined savers who continue to invest their $3,191 tax refund every year for two decades — for a total of $63,820 invested — earning a 6% average annual return is looking at $123,847. That's double the total amount invested.
Make 2017 the year that you get on the path to becoming a millionaire. You have until April 18 to open and fund a traditional IRA or a Roth IRA; see NerdWallet's roundup of best places to open an IRA. File your taxes soon so you can start amassing your fortune.
6. Invest in your 'human capital'
Another tax refund maximizing strategy is to increase the value of your human capital. That is, invest in yourself.
Think about it: You are your biggest income-producing asset. Your expertise, talent, experience, work ethic and reputation for bringing delicious snacks to office potlucks are all part of what adds value to this asset. And unlike stock market returns and interest rates, you can influence your own rate of return by improving your value in the working world.
Using your tax refund to pay for additional training, tuition, a work-related conference or membership in a professional organization is an investment that can pay off for years to come in bigger paychecks and greater job stability.
7. Repave your yellow brick road
There's no place like home, and given the price people pay for their split-level ranches, Cape Cods and condos, keeping the place in tiptop shape is a wise use of tax refund dollars.
If you're planning to put up a "For Sale" sign this year or refinance your home, heed Remodeling magazine's 2017 Cost vs. Value Report and concentrate on projects where you'll recoup the highest amount of your investment at resale. According to the most recent report, it's all about energy efficiency and curb appeal. You'll recoup 107% of the $1,343 average cost of adding fiberglass attic insulation, 90% of the $1,413 cost of replacing an entry door with a steel one and 89% of the $7,851 average cost of replacing vinyl siding on the street-facing facade with manufactured stone veneer. Here are four other ways to increase your home's refinance appraisal value.
Not all home improvements are about the bottom line. If a bathroom or kitchen remodel or a new deck would increase your enjoyment of your abode, that's reason enough to use your tax refund to spiff up the joint.