I try my best to get a $0 return. This year I did a pretty good job, only getting $50 back.
But if you are getting a large sum, I suggest following the investment order. That's what I would do in your shoes.
https://forum.mrmoneymustache.com/investor-alley/investment-order/WHAT
0. Establish an emergency fund to your satisfaction
1. Contribute to your 401k up to any company match
2. Pay off any debts with interest rates ~5% or more above the current 10-year Treasury note yield.
3. Max Health Savings Account (HSA) if eligible.
4. Max Traditional IRA or Roth (or backdoor Roth) based on income level
5. Max 401k (if
- 401k fees are lower than available in an IRA, or
- you need the 401k deduction to be eligible for (and desire) a tIRA deduction, or
- your earn too much for an IRA deduction and prefer traditional to Roth, then
swap #4 and #5)
6. Fund a mega backdoor Roth if applicable.
7. Pay off any debts with interest rates ~3% or more above the current 10-year Treasury note yield.
8. Invest in a taxable account and/or fund a 529 with any extra.
The case study spreadsheet that floats around here has a pretty good system for helping you determine the best way to set up your W2 so you are keeping more of your money in your pocket over the course of the year. If you are interested in adjusting your withholding to not get such a big return next year, of course.
Good luck!