Is a Big Tax Refund Good, or Bad?

This topic was covered this week in an Associated Press article titled: "It's OK to Get a Big Refund if You Don't Blow It".  I was happy that my name and some of my comments were included in the article which was carried on: ABCnews.com, Huffington Post, Boston Globe, Miami Herald and Bloomberg businessweek.com and many other websites and printed papers.  You can click here to read the entire article.

The real answer to this question, which applies to so many financial decisions, is: It Depends.  Some people love to get big tax refunds since it feels like a present from the IRS.  Of course, the IRS has had free use of your money for the past year, but at today's interest rates, you really wouldn't make much interest if you had it sitting in the bank.

As I mentioned in the AP article, the bigger question is what you will do with the big refund?  If you use it to pay off debt, save for college or build your emergency fund....Great!  But, if you spend it on another trip to Disney World or another big-screen TV....Bad Idea!!

My advice to my clients is always the same.  You should adjust your withholding so you get a small refund when you file your taxes.  Nobody ever likes to write a check to the IRS when you have a balance-due and a big refund is your money that would be better invested somewhere other than as a free loan to the IRS.

Most people get a refund, but think about my advice if you're one of those people with the big refunds.  

Have you filed your taxes, yet?  You only have a little over two weeks left before Tax Day on April 17, so what are you waiting for??

DISCLOSURE: This article contains only general tax suggestions so you'll need to talk with your tax professional to decide the best approach which will apply to your specific situation.