Make the Most of Your Income Tax Refund

As the April 15th deadline rapidly approaches, more and more people are beginning to file their tax returns in hopes of receiving a refund. This year, the estimated average refund amounts to nearly $2,500. Whether you're receiving more or less than this, the reason behind the refund is the same: you're withholding too much.

Withholding too much is certainly better than not withholding enough and then finding out you owe money, but having too much withheld has its pitfalls too. First, you're taking money out of your paychecks now, and giving it to the government to hold for a year or more. This money is earning interest, but guess what--the government is earning it, not you. Even if you find yourself with a refund this year, there are many great ideas you can use to help make the most of it. Paying down high-interest debt, stashing a some away for retirement, or even making an extra mortgage payment will go a long way in accelerating your financial success.

Also, use this refund as a reminder that you may have to adjust your exemptions on your W-4 so that you don't give the government so much extra money this year. If you carefully plan for this now, you can put more money into your pocket each payday that you can save, invest, or pay down debt, and end up with a smaller refund at the end of the year while making headway with your current finances.