Download
HTML Embed
HTML EMBED
Click to Copy

Latest Episodes

Download
HTML Embed
HTML EMBED
Click to Copy
Download
HTML Embed
HTML EMBED
Click to Copy
Corner Office from Marketplace
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report
Download
HTML Embed
HTML EMBED
Click to Copy
Download
HTML Embed
HTML EMBED
Click to Copy
Download
HTML Embed
HTML EMBED
Click to Copy
Download
HTML Embed
HTML EMBED
Click to Copy
Download
HTML Embed
HTML EMBED
Click to Copy
Marketplace Morning Report

Less than zero

Sep 17, 2019
Ask Money

It’s tax time! What should I do with my refund?

John Ketchum Feb 14, 2014
Share Now on:
HTML EMBED:
COPY

It’s income tax season. As taxpayers prepare for filing, we’ve got some practical advice on how you should prepare your taxes and what you should do with your refund (if you get one). We also took a closer look at the psychology behind filing tax returns.

Most taxpayers fill out their forms early to get their money back quicker. However, if you’re writing a check and not collecting one, you’ll probably want to wait as long as possible before filing your taxes. But how does a person decide how to set up their tax withholdings? It’s nice to get a big refund once a year, but wouldn’t you rather get more money from each paycheck?


Kelly Phillips Erb is a contributor at Forbes and runs the blog Taxgirl.com. She said it really all depends on where a person is at financially. Erb said that conventional wisdom tells us that we shouldn’t get a big refund, because you don’t get interest with it. Erb says that historically, if someone received a big refund they were looked at as doing something wrong. She said now, more taxpayers are under the gun financially and are looking at a refund as a forced savings account.

“A lot of taxpayers are now holding onto this big hope that they’re going to get a big check and they’re going to use it to pay off credit cards or they’re going to use it to pay rent,” said Erb.

Erb said she has always advised against getting a big refund, but she says that given the current economic climate it makes to sense to bank on that big chunk of money.

But once you get your refund, what should you actually do with it? CNBC personal finance correspondent Sharon Epperson said it should go towards retirement first.

“That might seem really kind of crazy. Especially if you’re in your twenties and you’ve got this money and you really just want to go to Cabo and you really just want to have a great vacation and get out of this weather,” said Epperson.

Epperson said the best advice she can give is to put it in a Roth IRA, since contributions you put into it can be taken out free of penalty.

Epperson said that paying off long term and high interest debt is also a priority.

“I’m just hoping that people are not getting this huge refund and getting a ton of credit card debt,” said Epperson.

We asked folks on Twitter how they’re going to spend their tax returns. Here’s what we got:

Follow Sharon Epperson on Twitter @sharon_epperson. Kelly Phillip Erb is on Twitter as @taxgirl.

If you’re a member of your local public radio station, we thank you — because your support helps those stations keep programs like Marketplace on the air.  But for Marketplace to continue to grow, we need additional investment from those who care most about what we do: superfans like you.

Your donation — as little as $5 — helps us create more content that matters to you and your community, and to reach more people where they are – whether that’s radio, podcasts or online.

When you contribute directly to Marketplace, you become a partner in that mission: someone who understands that when we all get smarter, everybody wins.

“I use clips from the show in my classes so students can grasp complex ideas and make connections to their own lives.”
Ashley, Ft. Worth, TX
Marketplace Investor