If a tax refund is headed your way, you might be wondering how to spend it. While it’s tempting to splurge on a big-ticket item, consider putting that money to work for your future instead!

One smart option? Contributing your refund to an IRA. Not only can this move help reduce your tax bill, but it also boosts your retirement savings. And if you’re already retired, you can use this opportunity to help fund a Roth IRA for your children or grandchildren, setting them up for long-term financial success.

Using Your Tax Refund to Fund an IRA in 5 Easy Steps

1️⃣ It’s Tax Time!

• Prepare your tax return and determine if you’re receiving a refund.

2️⃣ Determine Your Refund Amount

• Once you know how much you’re getting back, decide how much you’d like to contribute to an IRA or Roth IRA, keeping in mind the 2024 contribution limits:
  • $7,000 (under 50)
  • $8,000 (age 50+)
• You can split your contribution across multiple accounts if needed.

3️⃣ Direct Your Refund to Your IRA

• If contributing to only one account, you can request a direct deposit on IRS Form 1040.
• To split your refund into multiple accounts, use IRS Form 8888 to direct funds to up to three accounts.

4️⃣ Watch for IRS Cautions

• If using Form 8888, carefully review the five IRS cautions in the instructions (on pages 2 and 3) to avoid common mistakes that could delay or misdirect your deposit. You can find the form and guidance at www.irs.gov.

5️⃣ Follow Up on Your Deposit

• If your IRA deposit is for the prior tax year, confirm that your financial institution codes it correctly.
• If your refund amount changes due to adjustments, check which accounts are affected—you may need to file an amended return.
• If your refund is offset (e.g., due to unpaid taxes), verify which accounts are impacted and adjust accordingly.

Act Fast – The Deadline Is Approaching!

The IRA contribution deadline for 2024 is April 15, 2025—don’t miss out on this opportunity to make a meaningful impact on your financial future.

For personalized advice on making the most of your tax refund, contact our office at 517-435-4040 or questions@richmondbrothers.com to schedule a consultation.

Please note that Richmond Brothers, Inc. and its representatives do not give legal or tax advice. You are encouraged to consult your tax advisor or attorney.

© 2025 Ed Slott and Company, LLC Adapted & reprinted with permission

Ed Slott and Company, LLC takes no responsibility for the current accuracy of this information