Tax Refund Came, Now What?

Unlike all those people scrambling to get their taxes done to meet the deadline 2 days ago I’m one of those people that seeks to extract what’s rightfully mine from the federal and state governments as soon as I possibly can.  Unfortunately I usually have to wait a while to file due to all the brokerage and banking accounts statements I need.  This year it was March before I finally got everything done and submitted for my refund.

I know I know.  This would all be much easier if I would just try and optimize my withholdings from my W-4.  I would do it, but my income is too variable so I worry about owing the government a big wad of cash.  I guess that’s better than giving them a 0% loan though.  Perhaps in my next job I’ll set it up that way.

Anyway, I got federal refund today.  About $1,700.  The smaller the refund, the happier I am because that means I’m getting closer to optimized.  For me $1,700 is a better number than I’ve gotten in the past.

Now, what do you think?  How should I spend it?

Let’s see how about that lovely chaise lounge DW has been eyeing?  Nah.

How about paying down some credit card debt?  You guys know I don’t have that!

How about an auto loan?  You know I don’t have that either although the .74% APR from PenFed is really tempting when you’re driving a 15 year old vehicle.

How about funding a Roth IRA?  Now that’s a plan I can get behind.  I transferred $917 over to my Roth IRA holding account.  I created the holding account so I can dump in $ throughout the year and then fully fund my Roth and DW’s Roth at the end of the year.  I wish I were working towards the 2014 Roth’s, but we’re not quite there yet.  Why $917?  Well, I can put in $5,500 per person which sums to $11,000 and when you divide that by 12 and round up, it’s $917.  So, I knocked out this month’s contribution to the Roth’s.

That leaves roughly $783.  That’s just about enough for a fishing canoe for me!  If only I had a place to store a 16 ft. canoe.  Ha!

Oh well, guess that remainder will just sit in reserve account for now…

What about you?  How will you direct your tax refund?

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  • Just got my refund today (filed Friday April 12). $5,000 Way higher than I’d like but like you, I have variable side income and a CPA who I have to tone down lol.

    We broke it down $3K to Zero Percent Credit Card we took on a ton of expenses when we bought the new place. I know mathematically it isn’t the right move but I am sick of having that CC debt on my balance sheet. $500 to my Amex card which is paid off monthly. $775 to home repair fund which I just started (it was added to the $225 I already had). The remaining amount is unaccounted for but will likely go to investments and debt also lol

    • I know how you feel. We occasionally get those 0% store cards when we buy a new mattress or furniture. I hate carrying that debt even though it makes sense to pay it as slow as possible.

      That $5k could go a long way towards a new hot tub! 😉

  • Ours worked out pretty fabulously this year. $512 refund, $500 of which went right back to our tax dude for preparing them.

    • I have to admire your proximity to zero, but I don’t envy those tax preparation costs. I can still do state and federal on TurboTax for less than a hundred bucks. That’s even with my investments, a sole proprietorship, and an LLC. Are your taxes really so complicated that you couldn’t do it yourself?