A large tax refund may feel like free money. It isn’t.
This year about 7 out of 10 taxpayers will get some money back from Uncle Sam.
Early bird filers who submitted their returns when tax season opened Jan. 29 may get their money in the coming weeks.
Many tax refund recipients plan to put that money to work.
About a third of taxpayers getting a refund expect to save or invest the money, while nearly 3 in 10 will pay down debt, according to Bankrate.com.
Here’s the bad news: If the IRS sends you a huge check this spring, it means you’ve likely overpaid on taxes throughout the year.
“A large refund from the IRS may seem like an advantage, but it isn’t the best or most effective use of your cash flow,” said Tim Steffen, director advanced planning at Robert W. Baird & Co.
“You’re basically giving the IRS an interest-free loan,” he said.