16 smart things to do with your tax refund

Truth be told, you're better off not getting a tax refund. That money going back to you means that the government took too much from your paycheck, eliminating your opportunity to spend, invest, or earn interest on that extra cash. So you need to adjust your withholding. Calculate the proper amount of witholding using the IRS' withholding calculator.

Still, since a tax refund is commonly seen as a windfall, we offer our suggestions for what to do with a refund. The average federal refund this year will exceed $3,000, but our refund recommendations range from free to pricey.

For your home

Paint your interior. Use one of the high-scoring paints in our Ratings—some of the best finishes cost only $20 a gallon.

Create the right mood. Top-rated LEDs continue to come down in price, and some top models we tested cost only $10.

Update your landscape. Pruning an overgrown landscape with a selective removal of plants can make a yard feel more organized, and clear the way for new plantings. Perennials tend to be less expensive than annuals and fill the yard with seasonal color and blooms. Read more about how to fix the 5 most common lawn problems, and other lawn care tips.

Get a new refrigerator. If you love seltzer and your current fridge is on the fritz, you might consider putting your tax refund toward the Samsung RF31FMESBSR French-door refrigerator ($2,900), which has a built-in SodaStream sparkling-water-dispenser. Check our refrigerator buying guide and Ratings.

Set up a new gas grill. It's the right time of year to get your grill on with a new gas grill that comes with handy features. We've also sized up the best and worst grills for you to make the decision that much easier.

For your car

Upgrade your tires. New tires can make a measurable improvement in your car's performance and safety. When looking for new tires, focus on tires that do well in our tests for braking, handling, and resistance to hydroplaning.

Find a GPS navigator. You can get many of the same functions that the infotainment systems in new cars have by picking up a portable GPS navigator. Basic units priced at $100 and up from Garmin, Magellan, and TomTom provide helpful turn-by-turn directions. For a bit more, you get free traffic information. At the high end, you'll find devices that add features such as a trip computer, Bluetooth capability, an MP3 player, and an FM transmitter.

For your tech interests

Capture it all. If you're using your refund for an action-packed vacation, you can immortalize your surfing, diving, and water-skiing adventures with an action camcorder. The GoPro Hero3+ Black Edition ($400) is our highest-rated action cam; the Silver Edition ($300) is a close second.

Impress your friends with your bleeding-edge geekiness. Put the latest thing in electronics on your wrist, and get a smart watch. The function-packed Samsung Galaxy Gear watch—it makes calls, takes pictures, and more—is great for those who already own a newer Samsung phone. The sleeker but more basic Pebble, which alerts you to incoming calls and messages, works with any Android or iOS phone.

Buy an Xbox. Even nongamers will appreciate its other home-entertainment features: For example, the Xbox OneGuide shows you all your video-watching options in one interface; and you can use voice commands to control it. Now you can get the Xbox One in a bundle with the much-anticipated game Titanfall, normally $60 alone, for just $450 (marked down from $500).

For your bottom line

Pay down debt. According to surveys by the car-shopping service CarMax and Edward Jones, an investment house, a large percentage of refund recipients will use their windfalls to pay credit-card bills and other loans. We've outlined several approaches to managing your debt. First order of business: Negotiate with creditors for more favorable terms or to reduce what you owe.

Invest in your retirement. It's too late to contribute to an traditional IRA for a potential tax break for 2013, unless you planned for it in advance or want to file an amended return. But why not jumpstart your retirement savings for 2014? The maximum you can contribute to a traditional IRA for a potential break on your 2014 taxes is $5,500, or $6,500 if you're 55 or older. If you can stomach reading anything more about taxes, check out IRS Publication 590, Individual Retirement Arrangements for details on your deduction eligibility.

Invest in a child's education. Start or contribute to a 529 college savings plan. The money grows tax-free and remains untaxed if it's used toward qualifying higher-education expenses. And depending on where you live and the plan you choose, your contribution also may qualify you for a state income-tax break for 2014. Such plans are only one element in a college-savings strategy; read Parents' Guide to Saving for College for more ideas.

For your health

Go for a row. Rowing provides a great full body workout, working your legs, arms, and core. The Concept 2 Model D (shown, $900) received our highest Rating. Or consider the H20 Seattle Wooden ($1,100) rower. It scored almost as high as the Concept 2, plus it looks good and, since it uses water for resistance, it re-creates the sound of paddling on a lake or river.

Get a gadget. The Samsung Gear Fit ($200) is a stylish hybrid of smart watch and activity tracker. It looks good and is easy to use, though the apps for keeping track of your workouts are still pretty basic.

For your kid and yourself

Buy baby and yourself a new stroller. If you run or walk for exercise, consider the Schwinn Free Runner (shown, $220), which earned a very good score for running and excellent marks for maneuverability. This model is safe, thanks to its top-notch one-touch braking and five-point harness. If you have two kids to push around, consider the Graco FastAction Fold Duo Click Connect ($280). Check our strollers buying guide and Ratings for more details.

—Consumer Reports

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