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By Carol Church

When tax season rolls around, most of us feel a bit nervous as we do the final calculations (or have someone else or a computer do them!) It usually feels good if we see that in the end, we don’t owe the government anything, and in fact will receive a refund. I don’t know about you, but I certainly enjoy getting checks in the mail!

Photo by stevepb via Public Domain CC0

Once that money hits the bank account, however, it can be tempting to see it as “free money” or a mysterious “bonus” instead of what it really is—your hard-earned money that you just didn’t get at the time. But rather than viewing a refund as pennies from heaven, experts advise taking this opportunity to catch up on financial goals that may have gone unmet for the rest of the year. Some suggestions include:

  1. Plumping up the retirement fund: Take this opportunity to increase contributions to your TSP account or to start or increase contributions to a Roth or traditional IRA (especially important for spouses who may not be working full-time or at all). Be aware that there is an annual limit for both TSP and IRAs.

  2. Ensuring your emergency fund is on track: While most people know they “should have” an emergency fund available for unexpected expenses or problems, “should have” and “actually have” are two different things. Even $200-500 is a great start, but 3-6 months of living expenses should be the ultimate goal.

  3. Paying down any high-interest debt: If your family has any consumer debt, especially high-interest debt, this can be an excellent opportunity to pay it down or even eliminate it. It may be of interest to know that research finds that completely paying off a debt, even if it is small and not the one with the absolute highest interest rate seems to motivate people to keep going to eliminate more debt.

  4. Starting a PCS fund: As any experienced military family knows, there are a wealth of costs (many hidden) that come along with PCSing. A great way to handle this is to set aside funds in a dedicated account that can be called on when the “time comes.”

  5. Investing in home repair or maintenance: If there’s something that needs to be done that you’ve been putting off, now may be the time. But consider practicality and return on investment (that is, think roof repairs, not hot tub).

Of course, there’s another discussion to have here, and it’s about receiving large refunds, period. Most of us may have heard that receiving a refund is equivalent to “giving the government an interest-free loan.” There is, of course, some truth to this statement. With the average refund clocking in at about $3,000, that’s quite a bit of money that is not coming home in people’s regular paychecks. At the same time, it’s definitely an unpleasant surprise to owe money at tax time.

In a perfect world, we’d probably all be best off receiving a small refund. $500 or less might be good. It can be hard to hit this goal, especially for military families who may have somewhat unpredictable incomes. However, one very simple step is to make sure that withholding reflects the correct family situation and number of dependents. The IRS withholding calculator may be of assistance. It can also be useful to speak with the volunteers at the Volunteer Income Tax Assistance (VITA) program and see what they advise as far as number of deductions.


Horrell, K. Rethink Your Big Tax Refund Retrieved from

Internal Revenue Service. (2015). Tax Refunds Reach Almost $125 Billion Mark; Available for Tax Help. Retrieved from