1. Sock it Away. Far too many of us don't have a sufficient emergency fund. If your car breaks down, or you need to pay a large insurance co-payment, you need to have money on hand to do just that. Don't be sidetracked by the fact that money in the bank doesn't earn much. Remember - a bird in hand is worth two in the bush. Better to have the funds on hand than have to charge an unexpected expense and then pay interest while you wonder how to pay for it.
2. Bye-Bye Balance. If you have enough in your emergency fund, use that windfall to pay off some credit card balance or other outstanding bills. Paying off lots of little bills can be more satisfying than paying a large chunk on one bill, and it can simplify your monthly bill paying process.
3. Home Sweet Home. Once you are comfortable with some savings, and have the credit under control, do something good for yourself. Paint a room, fix a leak, and take care of your home. Due to the real estate market, many of us will remain put for a while, so make your space comfortable and functional for your family.
These three ideas can help you make your tax refund work for you. Planning for it is better than wondering where the money went.