Get great results from water-based finishes
Tips for Using Water Based Varnish

Raise the Grain First
Always raise the grain on raw wood before applying a water-based finish. Simply brush, sponge or spray on some distilled water and let it dry thoroughly (overnight is best). Then, resand with your final grit paper to break off the whiskers. Now when you apply the finish, the grain will stay down.

Seal Oil-Based Stain

Lay it Down and Leave It
Water-based poly should be laid down with a couple of quick strokes. Don't worry too much about the appearance of the wet finish. It will look awful at first, but water-based poly has an amazing ability to pull tight as it cures, like shrink wrap. The brush marks will disappear—promise. If you go back and try to rework the film, you're likely to cause a big mess. Resist the urge. If you see a dust speck, just leave it alone and fix the problem later with sandpaper and another coat.

Choose the Right Applicator

Use Synthetic Abrasives, Not Steel Wool

Refinish Kitchen Cabinets With Water-Based Poly

Strain Your Poly First
Unless you're using a brand new can of poly, always strain it with a medium-mesh strainer before applying it. Once the finish is used, it will be polluted with little bits of dried or semi-dried varnish, which will wreck your new finish. Stands and replacement meshes like the ones shown are available at woodworking stores and online.

Use an Extender in Hot, Dry Conditions

Add Color for the Look of Oil-Based Poly

Mist Your Wood Before Staining
Dry wood can aggressively suck up dye or stain, making it hard to control the color penetration. The result can be a dark, blotchy mess. For added control, try wetting the wood with distilled water right before you apply the dye or stain. (Be sure you've raised the grain first; see the first tip.) The increased open time makes the color easier to control. A household pump sprayer or sponge works great.

Water-Based vs. Oil-Based Floor Finish
Both offer good protection; the biggest difference is in appearance.
Water-based polyurethanes provide a clear, neutral finish and have low odor. You can recoat them in two hours and clean your tools with water. If you start early enough in the day, you can apply the recommended four coats and sleep in the room that night.
Oil-based polyurethanes leave an amber glow and require fewer coats. But the five-hour wait between coats and 12-hour wait after the last coat will put a bedroom out of commission for a few days—and you'll have to put up with a strong odor.

Apply Water-Based Poly With a Pad
Water-based poly dries faster than oil, so it's even harder to brush over a big surface. The solution is a paint pad, which applies poly fast and smooth. Just dip the pad into a pan of poly and drag the pad across the surface. Be sure to smooth out any ridges pushed up by the edges of the pad.

Is Your Poly Still Good?
Just because your poly has skinned over in the can doesn't mean you have to throw it away. First check the remaining material to make sure it's clear and particle-free. If the polyurethane has crud in it, try filtering it through cheesecloth. Then try brushing it on scrap wood. If it goes on fine, use it.
If the poly is water-based and too thick, thin it by adding water (no more than 10 percent). You can also thin solvent-based poly by adding up to 10 percent mineral spirits, but only if you live in a state that allows it. Some East Coast states and California prohibit users from adding solvents after the can is opened. In that case, you'll have to recycle the old stuff and buy a fresh can.
Always test thinned polyurethane on scrap wood before applying it to your project. Chances are it will work just fine. But if it doesn't look right, buy fresh material.