CMP Financial Planning

Five Things To Do With A Tax Refund


Five Things To Do With A Tax Refund

by Alissa Henry

It’s the most wonderful time of the year – tax refund season. A new Bankrate.com poll found that 80% of Americans expect
to receive a check from Uncle Sam this year. In fact, the IRS says that for every dollar it collects, it returns about 25 cents in refunds. If you’re one of those people expecting a refund check, here are five things to do with the windfall.

  1. First, pay down debt. If your debt is out of control and you are paying very high interest rates like 10% and above, then paying down debt makes sense.
  2. If your debt is under control, then consider funding your retirement account. If that account is deductible, your extra contribution will reduce taxes/increase refunds in future years!
  3. This is a great opportunity to use your extra money to contribute to a 529 account for your children’s college expenses.
  4. Or, boost your savings for a down payment on a big ticket item such as a home or car.
  5. Lastly, if you have your financial bases covered, consider using your refund to make a charitable contribution
    to help others in need. You’ll feel good — and you’ll be rewarded for your good deed when you file your tax return next year.