My advice typically is to strategically plan for your tax obligation throughout the year, thus minimizing your refund at tax time (which is really your money that the government saved for you throughout the year without paying you any interest on it), but many clients like to have spring refund “windfall”.

So what is the best advice for how to spend that “windfall”?

The top advice from several articles is:

• Pay Down Existing Debt
• Build Your Emergency Fund
• Pad your retirement savings

After those 3 consistent suggestions, the articles get creative with their advice. One even suggests taking $50 to buy a lottery ticket! Other suggestions include home improvements, HSA/FSA contributions, investing in college or training, vacations, high-ticket purchase, prepaying your mortgage, buying life insurance, and the list goes on….

If you are anticipating a sizeable refund from your 2021 tax return, you may wish to talk with us. This may be the best time to start pre-planning for your 2023 taxes and the best use of your own $ throughout the year. We can also give you a bit of advice as to where to spend those refund dollars.

by Dan DeHoek, CPA | ABV | CFP®
Managing Member, DeHoek & Company, PLLC