Tax Refund Loans: Don't Mortgage Your Future

One man from Oklahoma visited the site to post his justification for spending his refund on a family vacation. "Our initial plans were to put it away for a rainy day." he wrote. "Well, Disney World became our 'rainy day.'"

Laura from Cypress, Texas, takes the opposite approach. She already got her refund and "put it straight into a money market account to watch it earn interest."

Others want to know why people are planning how to spend their refund, rather than preparing their tax returns more carefully to avoid paying the money in the first place. "Don't give Uncle Sam a no-interest loan," Jordan from Houston writes.

Warner says 26% of Americans intentionally overestimate their taxes as a "savings strategy." She acknowledges that the approach doesn't make economic sense when compared with the rates of return offered by savings or investment accounts.

However, she says not everyone has the discipline to keep from spending cash they have on hand. "Depending on what your situation is," Warner says, "the money could have been blown during the year."

Next in the tax series: A Look at Your Real-Estate Taxes

TheStreet.com tax series previously featured:

• Get Your One-Time Phone-Tax Refund
• Don't Fear the Auditor
• A Reason to Procrastinate
• Booyah Breakdown: Taxes for Traders
• Don't You Miss a Tax Credit or Deduction
• Booyah Breakdown: Taxes for Traders
• How to Choose the Right Tax Software
• AMT:Little Tax Of Horrors
• Last Chance to File for Refunds -- for 2003
• Booyah Breakdown: Taxes for Traders II