Even though we’re well into the new year, perhaps the biggest financial problem from 2022 is still rearing its ugly head: high inflation. To make matters worse, tax experts are warning people to prepare for lower tax refunds this year—or potentially prepare to pay in—as COVID benefits expire and revert to their pre-pandemic levels.

This one-two punch can potentially have a serious impact on your wallet. And if you have to pay into the IRS, you could be feeling that hurt even more this year.

How to Boost Your Tax Return or Reduce Your Tax Bill

While there’s nothing you can do to drastically boost your return or eliminate a tax bill, there are a few steps you can take that will move the needle, and with this persistent inflation, every bit can help.

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1. Contribute to a Traditional IRA

You have until the tax-filing date of April 18, 2023 to make contributions to a Traditional IRA for tax year 2022. You can contribute up to $6,000 for the year (add an extra $1,000 in catch-up contributions if you’re over 50). These contributions can be deducted from your taxable income, but the full amount depends on your modified adjusted gross income (MAGI) and whether you have an employer-sponsored retirement plan.

2. Max out Your Health Savings Account (HSA)

This might not be an option for everyone, but if you can, try to max out your HSA. If you opened an account and were covered by an HSA-eligible health plan in 2022, you can make these contributions. Like your IRA, you have until the April 18 tax-filing deadline to make contributions to an HSA (up to $3,650 for those on an individual plan and $7,750 for those on a family plan, plus an extra $1,000 in catch-up contributions for those over 50), and like your IRA, these contributions are not counted as part of your taxable income.

3. Miscellaneous Tax Credits

Though many pandemic-era tax benefits expired, others remain, and if you qualify, they can provide the boost you need. For example, if you bought an electric vehicle in 2022, you may qualify for a $7,500 tax credit as part of the Inflation Reduction Act. Although, if you bought it after August 16, it must have been assembled in the U.S. for you to qualify for this credit.

Additionally, if you use clean, renewable energy in your home, you can qualify for Residential Energy Credits. A full list of tax credits and deductions can be found here.

The Pros and Cons of Tax Refunds

Those of you who are seeing money coming back might feel like the lucky ones, but that may not be the case. While it may feel like you’re being handed free money, there are downsides to that springtime pick-me-up.

The Pros

Who doesn’t like a little extra spending money? Whether you’re getting hundreds or thousands in your refund, there are some great ways to use that check to help bolster your financial plan. You might decide to treat yourself to a new purchase or a vacation, and you are certainly welcome to use your money however you please, but there are other ways you can use that money that might earn you a better return.

You can also use your refund to add extra contributions to your investment accounts. If you can afford to put that refund away for 20 years, you could end up doubling or tripling your money with a savvy investing strategy.

A tax refund is also a great opportunity to pay off a chunk of credit card, student loan or other debt you may have. Cutting down on your debt means you’re likely to pay less in interest payments over time, therefore making your refund even more valuable.

The Cons

Tax returns aren’t gifts. They’re refunds you get because the IRS withdrew too much from your paychecks or had withdrawals from other investment accounts. While it may seem like a great thing to have a tax return come each April, you pay for it the other 11 months of the year. When you get a refund from the government, it comes in the exact amount they owe you, without interest for holding it for the last 12 months. If you more accurately reported your withholdings and kept that money each month, you could then invest it and have been earning interest on those dollars the whole time.

Additionally, if you don’t have pressing needs or bills to pay, you may be tempted to spend that money immediately. If you’re prone to this kind of behavior, it might be smart to utilize the direct deposit option to drop that money into a savings account where you may be less tempted to spend it.

What to Do with Your Tax Refund

With even just this small list of pros and cons, there are clearly many different options for what to do with a check from the IRS. If you’re wondering what to do with your tax refund, or how to correct your withholding, talk to your financial advisor about ways to put it to good use for your financial future.