(NC) Getting an income tax refund may feel like getting a bonus at work. But that's not really the case. If you receive a refund, it means you overpaid your income taxes throughout the year. Once that money is back in your hands, you have several options depending on how much you get back, such as using it to pay down debt, starting an emergency fund or contributing to other financial goals.

Here are four options to consider:

1. Pay down high-interest debt. If you're carrying a balance on your credit card or line of credit, or have student or car loans, using your tax refund to help pay down the balance on one or more of them could help you eliminate these debts faster.

   Even if your refund isn't enough to pay off everything, you can still shrink the amount you owe, which can help reduce the total interest paid over the life of those debts. 

2. Make a lump-sum mortgage payment. If your mortgage contract allows it, using your tax refund to make an extra payment can shorten your journey to becoming mortgage-free. Using your refund to make a prepayment could help cut down your amortization period and result in paying less interest on your mortgage amount every month.

   First, it's important to find out whether you have a mortgage that's open to prepayments or closed to them.

   Open-to-prepayment mortgages allow homeowners to pay any amount of their outstanding balance at any time without prepayment charges—though you may still have to pay some administration fees.

   Even closed-to-prepayment mortgages may still give you the option of making lump-sum payments, with a limit on how much you can pay. For example, at TD, that number can be up to 15 per cent of the original principal amount each calendar year. If you want to prepay more, a fee may apply.  

3. Build your savings. Whether your refund is $100 or $1,000, using the money to start a savings account or add to existing savings can help you build up a rainy day fund. You could also use it to save for long-term goals like retirement or a down payment, or shorter-term goals such as a wedding, new car, travel or home renovations.

4. Invest for the future. It could be time to consider contributing to a Tax-Free Savings Account (TFSA) or a Registered Retirement Savings Plan (RRSP). All interest and earnings in a TFSA grow tax-free, and you aren't charged tax when you make withdrawals.

   Contributing to an RRSP helps you to save for retirement while also reducing your taxable income. With an RRSP there are additional rules as to when withdrawals must be made.