Have you filed your taxes yet? Hopefully you have and you are one of the lucky ones waiting for you huge tax refund. You may be thinking of all of the things you can spend it on before it arrives?! Hold up friend!! Before you book that trip to Europe, buy that new big screen TV, or remodel your house, let’s talk about a few things you should think about before spending your new windfall!

Increase your Emergency Fund
Unfortunately, banks aren’t paying very high interest rates today. However, if you have an emergency and don’t have the cash to cover it, relying on high interest rate credit cards is even worse. Look at your expenses for the year, and make sure you have 6-12 months living expenses in your emergency fund.

Pay off Debt
Do you have any outstanding credit cards? Student loans? Are the interest rates high? If so, let your refund pay them down or off. When paying off credit cards, make sure to resist the urge to use them again. You don’t want to have to waste next year’s refund on new debt.

Save for Retirement
It is never too late to save for retirement. You have until April 17, 2018 to fund a Traditional or Roth IRA. Unsure of how much or what type? Speak to your accountant to determine which type makes the most sense for your situation.

Save for Kids/Grandkids College
It is amazing how fast kids grow. I remember when I had my oldest 17 years ago and thought, one day I am going to set up a savings plan for her. Fast forward 17 years and we are now looking at what college she wants to attend. While she is touring these amazing schools, I get to sit and listen to an admissions person tell me the cost. Holy cow! I knew college was expensive…but wow! Luckily, we started saving early in a 529 account. A 529 account is a great tax-advantaged way to save and invest for you little one’s future.

Save for Something Big
Wanting to travel to Europe? Buy a new house? Home improvement projects? Going back to college? Planning and investing for those major life goals is important. Set aside the refund, invest, and add to it to reach that goal.

Just remember for this next tax year, if you refund was large, discuss with your CPA your tax withholding. You got a refund because you paid the government more tax money throughout the year than you needed to. Instead of loaning the government money interest-free (wouldn’t it be nice if they gave us a loan interest free?!), consider your withholding on your W-4 to have the correct amount withheld. You can then use that money to pay bills, pay down debt, invest, save for retirement…the list is endless! Contact your CPA today to discuss the correct amount of withholding for this year!

Opinions expressed in the article are those of the author and are not necessarily those of Raymond James. Investing involves risk and investors may incur a profit of loss. Raymond James does not offer tax advice.

Jessica A. Thompson, AAMS
Raymond James Financial Services, Inc.

Rules and laws governing 529 plans are varied and subject to change. As with other investments, there are generally fees and expenses associated with participation in a 529 plan. There is also a risk that these plans may lose money or not perform well enough to cover college costs as anticipated. Most states offer their own 529 programs, which may provide advantages and benefits exclusively for their residents. Investors should consider, before investing, whether the investor’s or the designated beneficiary’s home state offers any tax or other benefits that are only available for the investment in such state’s 529 college savings plan. Such benefits include financial aid, scholarship funds, and protection from creditors. The tax implications can vary significantly from state to state.