Though taxes aren't due for several months, some filers might choose to submit their returns early this year. And for most, the motivation will probably boil down to wanting their refunds sooner.

Each year, roughly 80% of tax filers end up getting money back from the IRS, and last year was no exception. In fact, the average refund in 2017 was $2,782 -- not a small amount. While getting a refund is something taxpayers tend to celebrate, the reality is that overpaying taxes during the year is a huge mistake. And if you don't correct it soon, you could end up seriously losing out.

Man resting his head on open laptop


The problem with refunds

What's so bad about getting a refund? After all, that's free money for you to use as you please, right?


Contrary to popular belief, tax refunds don't constitute free money. Rather, they represent money that should've been yours all along. And when we're talking about an average refund of $2,782, it gets even more problematic, because that's money that may have prevented you, or others like you, from racking up costly credit card debt.

Let's face it: Most Americans don't have an adequate amount of savings, so when unplanned expenses come up, they're forced to whip out the plastic in the absence of having the cash. But imagine this: If the typical worker in that scenario had access to an additional $232 per month upfront, they may have been able to avoid debt.

But here's the thing: You can get that extra money in your paychecks month after month. All you need to do is adjust your withholding so that you're not losing more money upfront than necessary.

More likely than not, however, you won't take that step. Why? Because you're afraid of the opposite scenario -- paying too little tax during the year and owing the IRS money. And it's that fear that could end up costing you.

Tax withholding: A far-from-perfect system

One problem with our tax system is that, to an extent, it's on the individual taxpayer to figure out how much to have withheld from their paycheck. When you fill out a W-4 at work, you claim allowances based on your personal circumstances, including whether your spouse works, or the number of dependents in your household. But these decisions don't guarantee that you'll wind up paying just the right amount of tax. Not even close.

This year, things will get even more complicated, now that a new set of tax laws has taken effect. While these changes won't impact your 2017 return, which is what you'll be filing this year, they will play a role in what you pay in 2018.

Generally, companies follow specific guidelines for withholding taxes based on your W-4, but since the IRS just released its new withholding tables earlier this month, some employers might need time to get up to speed -- which means you could end up with the wrong amount being withheld for a number of months. Furthermore, while the IRS is working on issuing new W-4 forms to better align with the new tax laws, those might not get widely circulated by employers until the following tax year. In other words, an already imperfect withholding system might get even more clunky for the time being.

Getting your taxes right

What can you, as an individual tax filer, do to avoid paying the wrong amount of tax this year? If you've historically gotten a large refund, adjust your current W-4 so that less tax is withheld throughout 2018. This is something you can typically do on a one-off basis with your employer.

Furthermore, read up on the new tax changes to see how they might impact you. Though certain key deductions are limited, or eliminated, under the new system, there are a number of improved tax breaks available that might more than compensate, so do some research to know what you're dealing with, especially if you tend to itemize.

Remember, your goal should be to get as close to the mark as possible with the taxes you pay. But when it comes down to it, you're far better off erring on the side of underpaying your taxes and owing the IRS down the line. This way, you'll have the option to use that money as needed, and that includes emergency expenses that might otherwise need to go on a credit card.

If you're really worried about owing money on your 2018 return, take the extra cash that lands in your paychecks month after month and stick it in a dedicated savings account that you pledge not to tap unless a true emergency strikes. This way, if you do come to owe money, you'll be able to dip in and pay the difference. And if you don't end up owing, you'll be the one to have gained interest on that cash, as opposed to the IRS.

Remember, tax refunds don't represent free money. Rather, they represent an interest-free loan you made to the U.S. government for no good reason. And this year, you deserve better.