Tips for your tax refund

NEWPORT NEWS, Va. - News 3 is taking action to help you make the most of your tax refund.

"We shouldn't be looking at it as if it's manna from heaven," said Newport News financial advisor Michael Mason of Mason and Associates.

Mason said if you receive a refund this year, you should:

  • Pay down any debts.  Consider paying down the debts with the highest interest rate.  For many people, that would be credit cards.
  • Save your refund.  Think about depositing it into retirement accounts like an IRA.
  • Have a plan.  That could mean using 1/3 to pay credit card debt, another 1/3 to put into an IRA and the remaining 1/3 to create a savings account for emergencies.

"Over time at a reasonable interest rate, it becomes half a million dollars in retirement savings in 30 years," said Mason about placing your refund in an IRA.

Mason said there are some things you should avoid doing with your refund:

  • Don't go on a spending spree
  • Don't spend in expectation of the refund

Mason said getting a large refund seems like a nice surprise, but that isn't necessarily a good thing.

"It's your money. You've overpaid," said Mason.  "That basically means you loaned money to the government.. Meet with a professional so he or she can make sure you have the correct withholding.  Then, you'll be keeping more in your paycheck year round.  With that money, make sure you adequately save for retirement."