Tax Day Tip: Invest Your Tax Refund in a Roth IRA
You'll thank yourself in retirement. Trust us.
The typical tax refund is about $3,000. Instead of blowing yours on Longchamp luggage or a trip to Vegas, you’ll ultimately be better off putting the money in a Roth IRA.
The beauty of this retirement account is simple: You can make withdrawals tax-free when you retire. With traditional IRAs and 401(k), you get taxed on withdrawals.
The basics: You can contribute up to $5,500 to a Roth IRA for 2017, or $6,500 if 50 or older. You can contribute the full amount as long as your income falls below $118,000 if you’re single, and $186,000 if married filing jointly. You can make a partial contribution if you earn up to $133,000 (single) or $196,000 (married).
If you work and your spouse doesn’t, you can contribute to a Roth IRA in their name subject to joint income limits. If you earn too much for a Roth, you can contribute to a traditional IRA, then convert it to a Roth later.
Learn about more smart ways to spend your tax refund.