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If You Got a Big Tax Refund, You're Probably Doing Something Wrong

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Hundreds of dollars missed each year — while Uncle Sam gets an interest-free loan.

U.S. Department of the Treasury Internal Revenue Service 1040EZ Individual Income Tax forms for the 2010 tax year are arranged for a photograph in Tiskilwa, Illinois, U.S., on Wednesday, March 23, 2011. The U.S. income tax filing deadline for 2010 taxes is April 15, 2011. (Photographer: Daniel Acker/Bloomberg via Getty Images)

Millions of Americans look forward to getting their refunds each tax season because hey, who doesn't love a big check?

But those refund checks come at a price.

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If you're getting a refund because too much money was withheld from your paychecks over the course of the year, you basically gave Uncle Sam an interest-free loan — and you missed out on the earnings that money could have made for you.

On Wednesday — Tax Day — the stats blog FiveThirtyEight released a nifty calculator showing just how much your refund cost you.

According to the IRS, the average refund this year was $3,120.

So how much did the average American lose?

Stocks performed well in 2014, and if the average American could have invested their refund instead of waiting to get it, they could have made some $249.

Image via FiveThirtyEight

Savings rates, held down by the Federal Reserve's insanely low, controversial interest rates, were so low this year that if you'd had your refund money in a savings account, you would have earned a measly $1.

Image via FiveThirtyEight

But the real kicker is credit cards.

Roughly 40 percent of American households are hemorrhaging money by carrying a credit card balance with a super-high interest rate.

If the average American had been able to put refund check money toward paying down credit card debt in 2014, they could have saved more than $300.

Image via FiveThirtyEight

Of course, tax credits are a whole different matter — the earned income tax credit, education credits and the like are money the government pays you, not money you earned that Uncle Sam pays back — but when it comes to withholding, there's a big lesson here.

If you got a big refund check this year, you could gain a lot by adjusting your withholding so that next year you get a smaller refund — and more money in your pocket over the course of the year.

How much did your refund cost you? Head to FiveThirtyEight to try the tool for yourself.

Follow Zach Noble (@thezachnoble) on Twitter

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