Everything you hear/read/see in this world tells you that if you get a big refund at tax time you have your withholdings set up incorrectly. Although I agree in principle that an interest free loan to the govt isn't the best personal finance decision, there are some cases where it might make sense to beef up your withholdings and take the big refund.

There is one very obvious reason, and that is that you can't hold on to money. The interest free loan to the govt argument only holds true if you're willing to set aside the extra amount each paycheck and actually earn interest on it. If you lower your withholdings and then spend the extra money every month, you aren't really helping yourself. In this case the tax refund acts as a sort of savings platform. Of course, you also need to have the discipline to not blow your tax refund on unneeded expenses. One technique that works for a couple I know is that they take their refund every year and put it into an improvement on their house. Last year was a deck, this year will be new landscaping in the front. If they changed their withholdings it's unlikely they'd be able to save the same amount of money.

Another reason, and I fit into this category, is when you don't know exactly what your income will be for the year. I have a full time job and a set salary, but I also do some side work for a little extra money. This side work is done on a contract basis, and thus, no taxes are withheld. It's worth it to me to beef up the account so that if I have a good year with contracts I won't owe a bunch of money at tax time.

Of course, both of these examples can be overcome with a great amount of discipline. However, most people don't have the discipline to save enough, so putting more money in their hands during the year will only bring them out with no savings and no refund. Be honest with yourself, if you can't hold to the discipline, then my advice is to continue the high withholdings and use your refund for something good (home improvements, IRA, college savings, etc).mortgage calculator