The IRS Has Sent Almost 58 Million Refunds This Year. Here's the Average Amount
- The IRS has issued almost $189 billion in refunds as of March 25.
- The average refund per tax filer is $448 higher than last year's average.
Hint: It's not a small number.
It's easy to make the case that a tax refund is not a good thing. When you get a refund, it means you paid too much tax the previous year and had to wait to collect your money. Or, to put it another way, it means you gave the government an interest-free loan and got nothing in return for it. Talk about a bummer.
In spite of that, most filers would rather get a large tax refund than a small one. And it's fair to say the average filer would prefer to get money back during the tax season than have to write the IRS a check.
Meanwhile, if you're getting a larger tax refund this year than you did last year, you're in good company. The IRS has given out almost $189 billion in refunds this season, and as of March 25, the average payment was $3,263. That's $448 more than the average refund in 2021, which came to $2,815.
If you're getting a sizable refund this year, it's important to put that money to good use. It's also important to reassess your tax situation -- and consider taking steps to get more of your money upfront.
Maximize that tax refund
If you're struggling to pay your bills (which many people are due to inflation), then it's a good idea to use your refund to catch up on expenses and pad your savings account so you have more financial wiggle room in the coming months. Along these lines, if you don't have a complete emergency fund -- one with enough cash to cover at least three months of essential living costs -- then you should stick whatever portion of that refund you don't need for immediate bills into the bank.
If you're okay savings-wise, consider using your refund to chip away at high-interest debt, like a credit card balance. Or, use it to contribute to your IRA if you're unable to set aside money from your paycheck for retirement savings purposes.
One thing you probably don't want to do is blow your refund on something like a phone upgrade or vacation -- unless, of course, you're really in a great spot financially. Living costs could continue to rise in the coming months, so it's a good idea to shore up your finances while you can.
Boost your paycheck
A $3,263 tax refund might seem like something to celebrate. But wouldn't you rather get that money upfront?
If you have a large refund on your hands, consider adjusting your withholding to have less tax taken out of your paychecks this year. Doing so could make it easier to keep up with your bills and avoid debt.
Even if you had to submit tax paperwork to your employer at the start of the year, your withholding is something you're allowed to adjust throughout the year. It may take your company's payroll department a little time to implement your requested changes, but know you have the right to adjust your withholding.
Since there's still a little time left in the tax season, it's too soon to determine what the average refund in 2022 will amount to. There's a good chance it will end up being higher than what it was in 2021 -- but whether that's a good thing is up for debate.
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