When tax season rolls around, you might bank on getting that big fat refund. In 2018, the average taxpayer who received a refund netted a cool $2,899, according to the IRS.

You’re pumped about getting a nice chunk of change from the tax man—but what if you didn’t have to wait until tax season to pocket it?

The amount of income tax withheld from your earnings can either mean more money in your paycheck throughout the year or a refund when you file your income tax return.

So how do you get your tax withholding right?

You’re in control of what you withhold.

Technically, your employer withholds federal taxes from your income. But to do so, they use your withholding allowance certificate (which you might know better as a W-4) as the guide for what to withhold.

Your W-4 is where you tell your employer how many allowances you want to claim. Most likely, you filled out a W-4 when you got hired. And you might assume that it’s a set-it-and-forget-it thing. Only eight percent of workers actually review their income tax withholdings regularly. And 68 percent haven’t changed their allowances in the last year.

The reality is, you can change your W-4 allowances any time you want. A good rule of thumb is to review your tax allowances annually to see if your withholding still makes sense for your current situation.

Keep in mind, this is not tax advice that’s applicable to your specific circumstances. So when filling out a W-4, you might want to consider consulting with a tax professional about your individual circumstances to avoid withholding too little and being penalized.

Getting a tax refund isn’t necessarily a good thing.

Getting a refund means you had too much withheld in taxes for the year. Essentially, what you’ve done is given the government an interest-free loan with your money.

So why is that not a great idea?

Well, consider what you normally do with your tax refund. If you’re one of the 27 percent of people who set it aside and don’t spend it, that’s great. But… you might not be getting the best return on your money.

Using the 2018 average refund as a guide, say you get that amount refunded to you each year for three years. That’s $8,700 in your pocket.

For example, say you adjust your income tax withholding so that you’re getting an extra $241.66 per month in your paycheck instead of a refund. You put that money into a high-yield savings account, like our Online Savings Account at Ally Bank, earning a 2.20 percent annual percentage yield for the same three year period. Over that time, your money grows to $8,982—almost $300 more!

The light bulb’s going on now, right?

Getting a refund starts to lose some of its appeal when you see how much your savings could grow, all because you paid attention to your tax withholding.

Should you claim 1 or 0? How to Fill Out Your W-4

Hands down, this is the trickiest part because you don’t want to withhold too little. Do so and you could end up owing money at tax time and, possibly, an underpayment penalty.

To figure the right amount to withhold you can consult a tax advisor about your specific circumstances or use the IRS withholding calculator. The calculator is updated with the latest income tax withholding tables to reflect new tax code changes that took effect in 2018.

No matter which way you adjust your tax withholding, it’s a good idea to think about where to put your money. Stashing your annual tax refund or setting up recurring transfers on payday in a high interest saving account might just get you one step closer to having an emergency fund or saving for that next big life moment.

Discussion questions:

  • When was the last time you updated your W-4?
  • What do you do with your tax refund?
  • Would you rather get a tax refund or have extra money in your paycheck throughout the entire year?

Get an online savings account rate that can help you grow your money faster than Uncle Sam can.

Go to Ally Bank