Where’s My Refund?

Mike Zaccardi

WE LOVE TO procrastinate. Have you done your taxes yet? IRS data show that nearly a quarter of Americans wait until the last two weeks of tax season to file. It often feels like that nagging task that grows more arduous each year, though the result for many is a juicy refund.

The average federal tax refund is more than $2,800, so it can pay to get your taxes done sooner rather than later. To be sure, instead of making an interest-free loan to Uncle Sam, it would be more rational to reduce the amount of federal income tax withheld during the year by giving our employers a revised Form W-4. We could then take the extra money in our paycheck and stash it in, say, a high-yield savings account, where we could earn interest, albeit at a paltry 1½% or so—and that rate is likely to shrink in the months ahead.

But most of us don’t operate that way. We like the forced savings that comes with having too much tax withheld. We like getting that large refund each spring. Chalk it up to mental accounting.

How are we using our tax refunds? Among those surveyed by GOBankingRates, 27% say they’ll use their refund to pay down debt. That makes sense. The Federal Reserve Bank of New York reports that Americans with a credit report are, on average, in debt to the tune of almost $52,000.

While my official title at work is market research analyst, I also conduct retirement and savings workshops for my colleagues, where I talk about a priority pyramid. First, contribute to the 401(k) up to the company match. After that, contribute to our company’s health savings account (HSA) up to the match. Next, pay off high interest rate debt.

Getting that free money from the employer match is great. But I know paying off debt can also feel like a huge win. Some other solid uses for your tax refund:

  • Contribute to a Roth IRA. You can do that not only for 2020, but also for 2019, by taking advantage of the prior-year contribution rule.
  • Put money in an HSA beyond what’s needed to get the employer match. As with an IRA, you can make your 2019 contribution up until April 15, 2020.
  • Shore up your emergency fund—a smart move given the risk of layoffs right now.

Finally, here are three tips if you haven’t yet filed:

  • Shop around for the best tax preparation site for your circumstances—which won’t necessarily be the cheapest.
  • If you have a complicated situation, see a professional. Don’t skimp. The last thing you want is a nasty-gram from the IRS.
  • To prevent identity theft, file electronically and use direct deposit. The IRS issues most refunds within 21 days of electronic filing.

Mike Zaccardi is a portfolio manager at an energy trading firm and a finance instructor at the University of North Florida. He also works as a consultant to financial advisors on an hourly basis, helping with portfolio analysis and financial planning. Mike is a Chartered Financial Analyst and Chartered Market Technician, and has passed the coursework for the Certified Financial Planner program. His previous articles include Scratching That ItchGood as Gold and Keep On Keepin’ On. Follow Mike on Twitter @MikeZaccardi, connect with him via LinkedIn and email him at

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