UPDATE: The Internal Revenue Service (IRS) has extended the tax filing deadline by one month, to May 17, 2021 to accommodate new stimulus payments and a backlog of tax returns. The IRS is also giving individuals who owe money on their 2020 tax returns until May 17, 2021, to make those payments. Individuals can also make contributions to individual retirement accounts (IRAs) for 2020 until May 17, 2021. Due to severe weather, residents of Texas, Oklahoma, and Louisiana have until June 15, 2021 to file, make tax payments, and contribute to their IRAs. Taxpayers who request an extension on the deadline will have until October 15, 2021, to file. You can get more information here.

Vacations, celebrations, nights out on the town, seeing the latest blockbuster in a theater with overpriced popcorn. All are postponed thanks to Covid-19. Now, many Americans are planning to add more one luxury to the deferred list— splurging with their tax refunds.1

American taxpayers are facing tough financial decisions nearly one year into the Covid-19 global pandemic that has plunged the U.S. into a recession and stripped more than 22 million jobs (and counting) from the workforce. That means cruises, home renovations, new cars, even the ability to pay down debt are all going to have to wait. But Covid-19 has not deferred entrepreneurial spirit or the uniquely American ability to find the silver lining. We spoke to 5 taxpayers who have big plans for their tax refunds.

Manny Vetti

President of a tax management company

West Palm Beach, Florida

Refund strategy: Invest the money and grow it for a future adventure

“I originally thought of taking a trip to Alaska to go fishing with it,” Vetti says of the estimated $3,000 he is expecting to get back this year. “But it must be a sign from the universe since Covid put a major stop on things. It’s okay. That was just my sign that I need to invest that money.”

Vetti says his change of plans made him remember how he blew one of his earliest refunds as a young taxpayer on an 8oz Wagyu ribeye and a $300 bottle of wine. 

“If I would have invested that tax return into a matching 401k or Roth IRA account, I would have had thousands by now,” says Vetti. And that’s what he tells his clients, who come to him for help managing their taxes. 

So with Alaska on indefinite hold, he is looking forward to seeing how much he can potentially grow this year’s refund.

“Who knows,” he says. “Maybe sometime in the future that investment will allow me to eat Wagyu steaks with the bears in Alaska.”

Shawn Breyer

Owner of a family-run law firm

Atlanta, Georgia 

Refund Strategy: Build an investment account for their infant daughter

“We had a child in 2020,” says Breyer. “We have opened an investment account…. for her since she cannot own one herself.”

Breyer is planning to put their $3,100 tax credit—that’s the $2,000 child credit plus the $1,100 extra stimulus for 2020 babies—into an exchange-traded fund, or ETF, that tracks the S&P 500. 

“We already invest $250 per month into this account,” Breyers says. “With a 10 percent return and dollar-cost averaging $250 per month, she will have $375,000 when she is 25 years old.”

Alex Willen

New business owner

San Diego, California

Refund strategy: Spend more on inventory to grow the business

Willen is still growing his new premium dog treat business called Cooper’s Treats, after Covid forced the closure of his last venture, a dog-boarding facility.

“Unfortunately, I lost a fair bit of money when I shut that down, so I have had to keep Cooper’s Treats as lean as possible financially,” he says.

Willen is expecting “a few thousand dollars” back this year which he expects will make a big difference combined with his austere business plan. 

“Things are going well with the budget I have,” he says, “but spending my tax refund on inventory will let me get my costs down by buying in bulk, which will really help my bottom line.”

Sarah Frey

Dog groomer

St. Louis Park, Minnesota

Refund strategy: Pad her savings account and pay down some student loan debt

“I was already thinking of putting some of my refund into my savings account,” says Frey, who is expecting “at least a couple hundred dollars” back. “My plans have only been adjusted in that I’ll be putting more than half of it towards savings, with the rest going towards getting myself out of debt.”

Even though Frey is currently working full-time, she is trying to be as financially stable as possible, especially given the ups and downs of the Covid economy. “I’d like to have as much cushion as possible in the circumstances we’re in,” she says. “My day job has definitely experienced some ups and downs with Covid-19. After being shut down in the spring, we booked out like crazy when we reopened. Business overall has still been slower than past years as we opened back up at a more limited capacity.”

Andrew Cunningham

Small business owner

Detroit, Michigan

Refund strategy: Business improvements and thanking their hardworking staff

Andrew Cunningham says he and his wife Karen normally spend their tax refunds on renovating their house, putting finishing touches or making repairs in one room at a time. This year is different. With Covid-19 hitting small businesses hard, they will be putting their refunds right back into their pest control company and their devoted staff. 

“Because of the pandemic, we have decided that both our personal and our business refunds will be going back into the business, but not only that, they will be put towards a summer retreat for our small staff of nine,” Cunningham says, estimating they would be getting back about $8,000 total.

“Our employees have had to take schedule cuts for nearly three months last year until we were able to get things back on track,” he says. Now they are looking forward to 2021 “and we have nothing but our staff to thank for that.”

Consider Stashing it

Have a tax refund coming your way? Consider stashing it in a Stash Retire account.2

Enter to win $5,000

If you direct deposit your tax refund or government stimulus check into your Stash banking account, you can earn a chance to win.‡

Find out more