How much is the average tax refund and when will I get mine? So far in 2023, the IRS has issued roughly 86 million tax refunds. Here is the average wage.
You can check on the status of your refund using the IRS Where’s My Refund? tool. The tool is available 24 hours after e-filing or four weeks after mailing a paper return.
If you haven’t received your tax refund yet, you’re probably looking forward to it. You may also be wondering how your refund compares to the national average.
Keep reading because you’ve arrived to the correct place.
How Much Is the Average Refund?
The average return as of April 21, 2023 was $2,753, which was 8.6% less than the $3,012 average the previous year. According to the National Taxpayer Advocate’s Annual Report to Congress, nearly two-thirds of taxpayers are entitled to refunds of about $3,200 in 2022, up from about two-thirds in 2017.
Average refunds have decreased since various tax credits that had been temporarily enhanced to assist with COVID-19 relief have either expired or restored to their original amounts for tax year 2022. However, even a smaller-than-usual refund can make a significant impact in your finances if you use it wisely.
When Should I Get My Refund?
If you submitted your tax return online and signed up for direct deposit, the IRS will usually issue your refund in less than 21 days. That implies that even if they filed their returns by the April 18 deadline, the majority of consumers should receive their refunds around mid-May.
If you filed a paper return, it can take six to eight weeks from the time the IRS receives your return to receive your refund, according to Lisa Greene-Lewis, certified public accountant and TurboTax tax expert. Requesting a physical cheque instead of direct deposit also adds time to the procedure.
You can check on the status of your refund using the IRS Where’s My Refund? tool. The tool is available 24 hours after e-filing or four weeks after mailing a paper return. Input your Social Security number and the amount of your refund to see if the IRS has received, approved, or delivered your refund. The data is updated on a daily basis.
“The tool will provide an actual refund date as soon as the IRS processes your tax return and approves your refund,” explains Melanie Lauridsen, the American Institute of Certified Public Accountants’ director of tax practise and ethics.
How Can I Make the Most of My Refund?
The extra money can be a terrific way to help better your financial status without interfering with your daily finances.
“Since this year’s tax refund may be lower than last year’s, I encourage you to spend time thinking about how this money can go the furthest towards your financial goals,” says Thomas Racca, manager of Navy Federal Credit Union’s personal finance division. “Be strategic in how you use this money.”
Paying off high-interest credit card debt, for example, can help you save money on interest, especially now that interest rates are rising.
“Credit card or loan payments can strain your budget, so think about paying down or paying off any debt you have to lighten your load,” Racca advises. “Since this money isn’t usually factored into your budget, it’s easy to put it towards your debt without missing it.”
Another smart strategy is to put money aside in an emergency fund, which is a separate bank account that you can access without penalty if you have unforeseen needs. “That way, if anything comes up you don’t have to rack up more credit card debt,” explains Greene-Lewis.
Contributing to an IRA can increase the value of your money. Contributions to traditional IRAs may be tax deductible, and the money will grow tax-free in the future. Roth IRA contributions are not tax deductible right now, but the money grows tax-free for retirement.
You may also be eligible for the retirement saver’s tax credit, which can lower your tax burden by up to $1,000 per person, depending on your income. Greene-Lewis explains that “the saver’s credit is something you can automatically get just for investing” in a retirement savings account.
Racca suggests using the funds to assist plan for future large expenses such as a trip or college fund.
“Your tax refund is a great way to get ahead on saving for future plans,” he claims. “I recommend opening a separate account to keep these funds separate from your daily spending and saving habits, and possibly considering a money market account for a higher rate of return.” Keep it off of your normal account view as well, to avoid the temptation to use those cash for unexpected purchases.”
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