S.C. woman uses federal tax refund to pay year's rent Most folks, though, should consider adjusting withholding to get tax money back year-round

Christina Knaack decided to use her federal tax refund the way many folks do. She paid for necessary living expenses.

But the single mom from Gaffney, South Carolina, took her refund use to the next level. She paid for her full year's rent.

Cristina Knaack's Facebook photo of her $5,400 receipt for paying all of her 2017 rent.

"I'm a single mom and I do it all by myself on a minimum wage job. I know that a roof over my kids' head is what's important." Knaack wrote in a Facebook post. "My kids don't want for anything because my priorities are straight. And this also means I will have that extra $450 a month to do things with my kids."

Positive use of refunds: While recent surveys show that folks are planning to save or pay off debts with their their tax refunds, many folks rely on their annual tax cash to meet day-to-day needs.

As I noted when I talked to Mark Williams of The Columbus Dispatch about refunds, for many folks, a tax refund is the biggest one-time chunk of money they get in a year, so they are eager to get their hands on it. To quote my quote in Williams' refund tracking story:

"There's a lot of interest. They are consciously over-withholding (taxes) anticipating a refund, and they want to be sure to get it as quickly as possible."

Over-withholding pros and cons: I know that a lot of tax experts say that over-withholding is a bad thing. You're essentially giving Uncle Sam an interest-free loan of your money for the full tax year and longer, since it takes a while nowadays for some taxpayers to get their refunds.

I tend to agree, but with a couple of caveats.

First, in recent years, minuscule interest rates mean that even if you had that money and put it into a savings vehicle, it wouldn't have earned you much.

Second, if using withholding as a forced savings account is the only way you can set aside some cash, then that's a better option than not saving at all.

But remember that if you're using your refund to pay off debt, such as an auto loan or credit card balance, if you had your refund money incrementally throughout the year, you could have made extra payments then. And that would have reduced the ultimate amount of interest you owed.

Adjust withholding for immediate money: So if you're so inclined to start getting your tax money back during this year instead of as a big check next year, adjust your withholding at work now.

It's not hard.

All you have to do is fill out a new W-4 that more accurately reflects your tax situation and give it to your payroll office.

This is something definitely should do if there's a major change in your life that could affect your tax bill, such as getting married, buying a home or having a child. And married couples, whether newlywed or long-time spouses, certainly need to coordinate their separate withholding amounts, too.

So how do you determine the appropriate number of allowances (which translate to exemptions on your tax return) to claim on Form W-4? The form has an attached worksheet.

Or you can use the Internal Revenue Service's online withholding calculator to help you come up with the correct amount to be taken out each paycheck.

Again, you can change your withholding as often as you deem necessary to get the amount taken out of your checks as close as possible to your eventual tax bill. Or as many times as your payroll administrator will let you before he or she starts locking the office door when you're spotted heading that way!

I know a big refund is like found money, but think about adjusting your withholding. Not only will you have your cash in hand every month, you won't have to hassle with tracking down your refund.

March 2017 tax moves: Tracking down your refund is the final piece of advice in the March Tax Moves feature over in the ol' blog's right column.

There you'll also find tips on meeting new business filing deadlines, like the change for partnership returns that's coming up March 15.

There's also more on tax mistakes to avoid, tax breaks to take and donating to charities to help lower your 2017 tax bill.

Check out those tips and more, listed under the countdown clock that's keeping track of how long until we reach the April filing deadline.

And think about adding adjusting your withholding to the list.

You also might find these items of interest:

• The pros and cons of tax refunds
• Talking Taxes: Adjusting withholding
• Tax refund spending tips, withholding effects

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