02/17/2012 02:53 pm ET | Updated Apr 18, 2012

2012 Tax Tips: 6 Ways to Keep More Money in Your Pocket!

If you are like most Americans, you are most likely looking forward to receiving your tax refund check, so that you can pay down some debt, take a vacation, or buy that really nice ________ (fill in the blank). With the economy still in limbo, it is imperative that you find a balance between what you spend and want you save. Most importantly, you must find ways to get more out of your refund, as well as keep more of it in your pocket. The following are tips that will help you maximize your 2012 tax refund, as well as give you ways to stretch it next year.

1) No Tax Anticipation Loans: Tax preparers know that most people are desperately awaiting their refunds so they are quick to sell you a "rapid refund" or "tax anticipation loan" Don't Do It! What they don't tell you is that you are going to be paying anywhere from 50 percent to 500 percent interest on this loan. Additionally, they are only speeding up your refund by maybe a week or two, so having patience will put more money in your pocket.

2) Prepare & File for Free: Why pay someone to do your taxes when you can have it done for free? There are many programs and organizations that provide FREE tax filing if you qualify. VITA (Volunteer Income Tax Assistance) is an example of an IRS-sponsored program. Make sure that you are checking with your local organizations and the IRS to see if you meet the guidelines. Also, you can file your taxes online with the IRS without charge. Take full advantage of these options and put the extra money to good use.

3) Take advantage of tax credits: The IRS has allocated certain tax credit to assist those in need with coping with everyday life. Make sure you are taking full advantage of them if you qualify.

  • Earned Income Credit (EIC) - The EIC is designed for low-income taxpayers and provides a maximum credit of $5,666

  • Child Tax Credit - Allows you to receive a credit of up to $1,000 for each child you claim up to age 17. You have to earn at least $3,000 in taxable income in order to qualify.
  • Child and Dependent Tax Credit - This credit is offered via state and federal government and allows you to claim a portion of your child care costs.
  • Education Tax Credits (The American Opportunity Tax Credit) - Gives a credit of up to 2,500 for students who are in the first four years of college. The credit is to be used for tuition, books, and other educational material. You must meet certain income requirements.
  • 4) Invest your money wisely: Most people look at their tax refunds as a lump sum of money that is extra to what they make. So, it shouldn't matter what they spend it on, right? Wrong! Getting a tax refund simply means that you paid the IRS too much money! It means that this is your money that they are giving you back! With that said don't throw your money away by spending it on frivolous things. Try spending your money on assets that appreciate so that you can see some type of growth on your money. Some examples include IRA contributions, down payment for a home, rental property, network marketing, startup fee, etc.

    5) Pay off Highest Interest Debt first: If you are going to use your refund to pay down debt make sure you are paying off the debt that has the highest interest first. For example if you have a $10,000 card at 21 percent interest and a $2,000 card at 5 percent interest with a refund of $3,000 you should pay down the $10,000 card because the interest is higher. That is a savings of 16 percent.

    6) Adjust your withholdings: Last but not least... Stop giving the IRS an interest free loan. Like I stated previously if you are receiving a tax refund that means that you are paying the IRS too much money. While most people think that getting a tax refund is a good thing most financial experts including myself will tell you that you should adjust your withholdings so that you receive more money in your paycheck during the year which gives you the opportunity to save more. Caution: This concept only works if you discipline yourself to save!

    Again, tax money is not free money! It is money that you worked hard for so make sure you are being smart and doing what needs to be done to keep most of your money in your pocket!