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In 2012, the average federal tax refund for Americans was $2,800. If you have a big family or a low income, your refund was likely even more than that. Even though you should know about what to expect with your refund, most of us treat it as a windfall. Choosing what to do with this big check may be the hardest financial choice you make all year.

A 2012 survey from the National Retail Federation showed that more Americans than ever were intent on saving their refunds. In fact, 43 percent planned to sock that check away, and about 40 percent planned to pay down debt with their 2012 check.

Related: 4 Creative and Smart Ways to Invest Your Tax Refund

How will you use your tax refund this year? We’ve got a few ideas to consider:

1. Create an emergency fund

If you don’t have an emergency fund, your tax refund is a perfect place to start. Emergency fund recommendations range from $1,000 while you’re paying down debt to six months’ worth of income. Your check from the IRS may be nowhere near the upper end, but it could still be a good start on an emergency fund to help you through potentially rocky times in the next year or two.

2. Pay down debt

If you have an emergency fund (or access to cash or credit in an emergency) it’s probably time to focus on paying down debt. Since debt typically costs more than investments earn, now is a great time to pay down debt – especially higher-interest debts that are eating away at your monthly income and potentially lowering your credit score.

3. Buy a home

Depending on home prices in your area, your tax refund may be enough to cover a down payment – or at least a big chunk of it. With an FHA loan, you only need a 3.5 percent down payment (plus closing costs), so a $3,000 check could be enough to get an FHA loan on a small home in, for instance, the Midwest. Already have a home? Consider using your refund to buy a HUD home as an investment.

4. Fund a retirement account

If you haven’t started a retirement account – or if you just need to catch up on your savings – putting your tax check into a 401(k) or IRA is a great idea. The sooner you fund your retirement account, the more easily you’ll save for your eventual retirement.

5. Upgrade your furniture or appliances

If you’re wasting energy because of an inefficient washer-dryer set, or your couch is falling apart at the seams, you may want to use your refund check to buy new furniture or appliances. One advantage here is that you can often negotiate for a discount if you pay in cash – or you can buy lightly used furniture from Craigslist for a fraction of the retail price.

6. Renovate your home

Whether you’re getting ready to sell your home or you’re settling in for the long haul, your tax refund is a great way to start renovating. There are so many large and small ways to renovate, some of which can increase your home’s value. One Fox News article advises looking for ways to make your home more energy efficient, increase curb appeal, or improve the look of your kitchen or bathroom.

7. Go on vacation

You don’t have to spend a fortune to go on a nice vacation, and a relaxing trip can be the perfect way to rejuvenate yourself for new ventures in the rest of 2013. Whether you decide to backpack in Europe or enjoy a luxury cruise, you can use the web to save when booking your vacation so that your tax check stretches further.

8. Start a side venture

Whether you want to turn a hobby into a business or leverage your work experience as a side venture, earning a second income from another business is a great idea. You could start a blog, work as a consultant, or mow grass on summer weekends. Whatever your side venture, you’ll probably need a little capital to get started. Your tax refund is just the place to get it.

9. Take a class

Whether you want to enrich your life with a new hobby or knowledge or boost your employability, paying for a class with your tax refund is a great idea. In fact, you may be able to pay for an entire year’s worth of classes at a community college, if you want to work toward a new career field.

10. Give to charity

Donating to charity is a great way to boost your own sense of well-being. Plus, you can claim charitable giving on next year’s itemized taxes, so you could get an even better tax break next year.

These are just a few ideas for how to use your tax refund. Are you getting a check from the IRS this year? If so, how do you plan to use it?

Article comments

Christian L. says:

I wish more people understood how wise it is to save your tax refund. Mine was quite small but it went straight into my emergency fund. People think, “Oh, that’s not a significant amount to save.” Ahhh, it drives me nuts!

Thanks for the list of wise moves!

-Christian L. @ Smart Military Money

Julie Gaudet says:

My tax refund wasn’t very high this year… but it went straight into my Financial Freedom Account (aka retirement savings). There was never a question in my mind where it was going.