Most people in the US love their large tax refunds. It is like winning a small lottery. Unfortunately, that is your money that the government has their hands on all year long and they aren't even paying you interest! You can change this, so that the money is in your pocket now.
First go to the IRS Website, and use their withholding calculator to determine their suggested number of withholding allowances for your income. Compare this to what you already withhold. It generally will be a higher number than what you are already claiming. Some people only claim allowances based on the number of people in their family. We have four members, but we claim 9 allowances.
If the withholding calculator on the IRS website is confusing, you might consider looking at an actual copy of a Form W-4. It has written instructions, that tell you based on your situation what number of allowances to claim. This is the same form you will fill out at your employer to change the number of allowances want to claim.
I bet now you are worried or curious about how those increased allowances will change your paycheck, right? I've used this website, Paycheck city, for years to calculate our net paycheck. (I noticed this website also has a W-4 assistant, or another calculator to determine your allowances.) Play with it a bit. Try withholding the allowance the IRS suggested. Look at how much extra you will get added to your paycheck each pay period! Nice, huh? That's your money the government was going to hold on to for you until the next tax filing period. You want that money don't you?
If you still want a bit of a refund, consider lowering the suggested withholding by 1. Also remember to go back to the calculator at the very beginning of 2013. Your withholding may need to change because this year you are adjusting mid year. The number suggested now may be higher to make up for claiming less allowances earlier in the year.
Just messing with the calculators will give you lots of information. Remember to actually fill out the new Form W-4 with your employer to make it happen.
How much extra are you putting in your pocket by claiming the right amount of allowances?