1. Pay down your high interest credit card debts
One of the best debt to pay down is non-deductible debt that has high interest rates, like credit card debt. Unlike the interest you pay on a mortgage or home equity loan, credit card interest is not tax deductible.

2. Pay Down Your Mortgage
If you do not have credit card debt, I would suggest that you make a principal payment towards your home mortgage. Making a lump sum payment to be applied to the principal on your mortgage can save you thousands of dollars.

3. Next consider using your refund to fund your Roth IRA contribution for 2007.
You can put in up to $4,000per person, or up to $5,000 if you're over the age of 50. The cash will grow tax-free forever and you just can't beat that.

4. Jump Start your child’s college fund or maybe even yourself.
Use the refund to fund your child’s college savings account, and perhaps you should consider opening a 529 College savings plan to jump start your child’s college savings funds.

5. You might also want to use your tax refund to start a house fund.
Use the refund as a down payment on a first home purchase or even an investment property. Further, you could use it to pay for closing costs. Alternatively, use the proceeds to renovate your home or do ongoing maintenance.

6. Use to install energy efficient appliances
A tax refund offers a great opportunity to invest energy efficient appliances. The best part is that the Uncle Sam may be able offer you special tax credits for the installation of energy-efficient home technology.

7. Make an IRA Contribution Now
If eligible, use the tax refund to make an early IRA contribution, why wait until April 15, 2008 to start earning money on your contribution?

8. Pay Off Your 401(k) Loan
If you have borrowed against your 401k plan, use the tax refund to pay off this loan.

9. Create an emergency fund
Use the refund to create an emergency fund. In today’s world job security and unexpected expenses are constantly occurring. Therefore, having an emergency will help meet short term crisis.

10. Deposit the Refund in your highest paying savings account.
If you do not have any outstanding liabilities and already have an emergency fund and met all of the above commitment, then why not deposit this into a savings account.

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Ask TaxGuru Please refer to the legal disclaimer.