6 Ways to Get the Most From Your 2012 Tax Refund

WASHINGTON (MainStreet) -- That $2,946 average refund the IRS has been handing out this year isn't getting any bigger, so you may as well use it while you can.

Hey, we all know what supposedly "good" boys and girls are supposed to do with their tax refund: Pay down debt, save, or put it into an IRA or mutual fund and wait for the IRS to come after the interest when you finally take it out again. Well aren't you all good little worker ants? It's great that the same folks who were leasing luxury marque cars, mortgaging McMansions that looked like "luxury" double-wide trailers and ordering shots or bottle service of whatever costly alcohol brand was name dropped last in a music video are now born-again believers in austerity. Just because fair-weather spendthrifts been shell shocked into not throwing money on every shiny thing within reach doesn't mean they'll necessarily make purchases that will stretch those saved dollars to their potential.

According to the National Retail Federation's 2012 Tax Returns Consumer Intentions and Actions Survey, conducted by BIGresearch, of the 66% of Americans expecting a refund this year, 44% will sock their refunds away -- up from 42% last year. Meanwhile, 40% will pay down credit card and mortgage debt.

That's perfectly OK, we guess, but it seems like the 12.3% of Americans who are going to spend their refund on a big-ticket item this year, down from more than 13% last year, will have a lot more fun.

"After a rocky few years, consumers are now more vigilant about how they spend their money and the importance of preparing for future financial stability," said NRF President and CEO Matthew Shay. "Increased consumer savings proves extremely beneficial to shoppers and businesses in the long run, allowing future opportunities to invest in a large household item or even take advantage of a well-deserved family vacation."

As noted earlier, however, that average refund isn't getting bigger. It's already down from the $3,022 that was doled out at this time last year after the Making Work Pay tax credit expired and credits for first-time homeowners tightened. That's a shame, since Americans are better prepared to spend than they've been in years. The national unemployment rate dropped from 8.9% in February 2011 to 8.3% last month. Meanwhile, the Consumer Confidence Index jumped 9.6 last month even as average gas prices flirted with the $4 mark.

There are still ways to help boost the economy without being an absolutely spineless spender. Here are five ways to take that $2,946 shopping while still spending wisely:

Home remodeling

Putting in an attic bedroom or throwing up some vinyl siding will cost way more than $3,000, but you can make an investment in your home that adds more resale value than any of those changes.

According to Remodeling Magazine's latest Cost. vs. Value Report, the home improvement that gives a homeowner the most back his or her entire investment in resale value is swapping out existing front, back and side doors with steel doors. It's a bit of a fortress mentality, but the average $1,238 spent swapping out an old door and jambs with a 20-gauge steel door with new casings and lock set consistently adds $903 (or 73% of its cost) in resale value.

Replacing a garage door for $1,500 yields a similar 72% return on the investment. Taking the project upscale with a $2,996 replacement including an insulated door, thermal seals between the panels and insulated glass kicks the return up to 78%, even if it costs another $50 out of pocket at the outset.

Travel

If you have the money and the vacation time, use both immediately. According to Rick Seaney, CEO of FareCompare, there have been five major airfare hikes this year.

Only two stuck, but expect more as fuel prices rise. Back in January, when oil was $100 a barrel, Delta succeeded in getting United, American and U.S. Airways to agree to a price bump that hiked the price of a round-trip ticket $10 to $20. On February 15, when oil jumped to $102 per barrel, formerly low-cost Southwest Airlines kicked off an industry-wide hike by increasing roundtrip fares by $10. Earlier this week, Southwest was at it again, this time dragging along JetBlue for a $6 to $10 round-trip increase tied to the $107-a-barrel price of oil..

We haven't even hit the peak summer months yet. Combined with increasing fees, rising fares are a great reason for travelers to book their tax return into a trip quickly. TripAdvisor's SmarterTravel, for example, is eight-night packages from New York to Dublin that include meals, transfers, hotels and sightseeing for $1,639 a person. If that sounds a bit brisk, they're also offering trips from Los Angeles to Fiji and a seven-night stay at the Sonaisali Island for $1,542 per person.

How exactly is this a good investment? Well, there are always the pictures and memories they can't take away from you, but getting away to a place that in no way resembles work or home usually pays off in unloaded stress. You won't be alone in your splurge, either, as 11.3% of Americans told the NRF they plan to blow their return on vacations this year.

A used car

If you have a lot of time to go trolling eBay and other sites for just the right vehicle and are willing to step a few decades into the past, you can still get a sweet ride for less than $3,000.

The folks at Popular Mechanics looked into this and found that the first-generation Mazda Miata (1989-1994) is not only still widely available thanks to Mazda building tens of thousands of them, but that the 1.6-liter four-cylinder drop top has a huge parts market. If you can snag one with no rust on it that was buffed by the retiree who bought it before you, you could end up with a low-mileage steal.

Another gem for the money is the BMW E30 3 Series that last rolled off the production lines in 1991. It's a tough find at more than two decades old, but if you can find an "I" version with an inline six-cylinder engine and 168 horsepower, take it. There are more expensive all-wheel-drive versions out there, but the iconic look and tight-handling rear wheel drive version is worth digging for, especially considering the parts available.

Want to really blow some minds? Take that three grand you could just as easily spend on a beat-up Jeep Wrangler or an esoteric Ford Probe and put it toward the most underrated car ever produced: The Pontiac Fiero. The four-cylinder version gets 40 miles to the gallon, but mid-engine design now used by luxury automakers is really best suited to the 2.8-liter V6 that first appeared in the 1986 models. If you're particularly adept in the garage, you can swap out the sports suspension and vented disc brakes from a 1988 version into an older model, but you'll have a classic on your hands for chump change.

Charitable donations

Remember that charitable donation you always said you were going to make if you had the money? That tax refund is a perfect opportunity to back up that hypothetical altruism.

The best part? If you pick the right charitable organization, you can just write it off on next year's taxes. That's not the most selfless tact in the world and it means you'll have to itemize next year, but if the loophole's there you may as well use it.

If there's any question about which charities qualify for the deduction, the IRS is glad to spell it out for you in the longest, most bureaucratic form possible. IRS Publication 78 spells out exactly which groups make the cut. It's a large, lengthy text file, but even charitable tax breaks require some sacrifice.

Furniture

There's a strong chance that the home d├ęcor style of the moment is going to turn into your kid's kitschy off-campus furnishings within a generation, but that's still a lot of mileage from found money. Living room sets, dining room sets and kitchen sets in classic, clean inoffensive styles are your best bet, but other rooms will give you a better return on your investment?

If you're catching elbows to the face when your partner rolls over at night or your mattress is jabbing you in the side with a spring like it's trying to steal your wallet, consider throwing that $2,900 or so into bed with you. That price can get you a king or California-king-sized Tempurpedic, a king-sized Stearns & Foster or a king-sized Simmons Beautyrest at department stores such as Macy's(M) or Sears(SHLD), but it also gets you the only piece of furniture you're going to use 2,100 to nearly 3,000 hours a year.

Storage unit

Your tax refund may be too small to help you find a bigger place, but it can help you breathe a little easier by taking some stuff off your hands.

If the closets are crammed, the cabinets are stacked like a game of Tetris and the basement and attic are either lost causes or flat-out nonexistent. Your refund can help you clean out and organize while ensuring your stuff doesn't end up on a show like A&E's Storage Wars for nonpayment.

But can you afford it? With $2,900 in your pocket, easily. At 10-by-15-foot unit costs roughly $1,700 a year. Bump that up to 10 by 20 feet and it tops out at $1,900 a year, or $2,200 with climate control. Even if you max out with a 20-by-20-foot cavern, the $2,700 annual cost still falls within budget.

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