Here's the Average Tax Refund as of Mid-March. How Does Yours Compare?

The IRS has sent out a lot of money in refunds this year. Here's how much recipients have been getting.

Not every filer who submits a tax return gets a refund. But each year, the majority of people who file taxes do get some amount of money back from the IRS. And that sum can be significant.

As of March 11, the Internal Revenue Service (IRS) had issued more than 45 million refunds worth almost $152 billion in total. Meanwhile, the average tax refund per recipient was $3,352. That's $537 more than last year’s average refund of $2,815.

There are several more weeks to go in the 2022 tax-filing season, so we could see that average number change after all is said and done. But either way, if you're getting a large refund, it pays to put that money to good use. It also pays to reassess your withholding situation -- and see if you should start collecting more of your earnings upfront.

Make the most of your tax refund

If you're getting a large tax refund, it means you paid the IRS too much money last year. In light of that, it's important to put that lump sum of cash to good use.

If you don't have enough money in your savings account to cover three to six months of essential living expenses, then one priority should be using your tax refund to build an emergency fund. Once that's done, strongly consider using your tax refund dollars to pay off high-interest debt, such as a balance you may be carrying on your credit cards.

You might also need to use your tax refund to cover everyday bills. Inflation has made the general cost of living far more expensive than it's been in years. If you've been struggling to make ends meet, then it pays to set money aside to pay for essentials like gas, groceries, and school supplies for your children.

Is your refund too large?

If you're getting the average multi-thousand dollar refund, you may want to adjust your withholding, so you have less tax taken out of your paychecks from month to month. This is something your company's payroll department should be able to assist with.

If you're able to raise your paychecks by a few hundred dollars a month, that alone could help you stay out of debt in the course of paying your bills. And while it will mean getting a smaller refund next year -- or, possibly, no refund at all -- you're better off going that route than struggling financially.

What’s more, if you're worried that withholding taxes in the near term will result in a massive IRS bill in 2023, take the extra money in your paychecks and put it into a dedicated savings account. That way, you can pay for basic bills with it if needed. If not, you'll have some cash available in case you end up owing money next year. Also, you'll earn interest on your money -- instead of giving the government an interest-free loan.

It'll be interesting to see what the average refund in 2022 amounts to by the end of the tax-filing season. But either way, if your refund is generous, be sure to make the most of it -- and consider making changes to get more out of your money as you earn it.