Tax Refund 2013

I did my taxes yesterday and ended up getting amazing news.  I’m getting $1,769 back from the federal government and $387 from the Great State of Delaware.  What am I going to do with all of that moolah that will suddenly appear in my budget?  I’m going to stick it straight into my Roth IRA!  I’m so adventurous, I know.

The reason my return is so large is twofold:

·         Since I only started working in June, my gross annual income was fairly low.  This means that my initial deductions ($3,900 personal exemption and $6,100 standard deduction) stretched a lot further than they will next year when I make a full salary.

·         I paid almost $3,000 in student loan interest. (I paid off everything that had accrued while I was in school in addition to the monthly accrual since graduation.)  This means I managed another $2,500 deduction that wouldn’t even have to be included in itemized deductions.  Woo hoo!

The only downer about getting a big tax refund is that if I’d kept that money over the last 7 months, rather than paying it to the government, I could have been putting it in my Roth and earning interest and returns on it.  I know that the best situation in the long term would be to actually owe a little bit because then I would really be earning the maximum I could.

Wouldn’t it be nice if the government also paid interest to you on the excessive money they withheld?  How did you tax return turn out?  What will you do with your windfall?