Most of the time, the faster you file your taxes, the quicker you’ll get your refund (which eliminates the possibility of tax fraud). To determine how much of your income isn’t subject to income tax withholding and how many credits and deductions you’re eligible for, your employer will utilize your W-4 tax form to calculate how much of your paycheck will be withheld for federal and state income taxes.
Even if you like to put things off until the last minute, you should try to have your tax return filed before the April 18, 2022 deadline. Knowing what to anticipate from a refund, as well as how to safeguard it, is essential.
What is the average tax refund?
For example, the average federal tax refund for people in the 2020 filing period, which covers returns submitted for the 2019 calendar year, was $2,707.
There is also a difference across states regarding the typical tax refund. As an illustration, the ordinary taxpayer in Maine received a return of $2,314. In contrast, the average taxpayer in Texas received a refund of $3,191. Remember that receiving a tax refund only means you lent Uncle Sam money without collecting any interest. The government is now repaying you for the excess funds deducted from your salary.
Due to the COVID-19 outbreak, the IRS has been taking longer to review all submitted items, resulting in delays in most tax refunds being issued within 21 days. The following may also cause delays in the issuing of your refund:
- Returns that contain errors
- Returns that aren’t fully filled
- Returns claiming the earned income tax credit or the additional child tax credit
- Identity theft and fraud-related refunds
A total processing time of up to 14 weeks applies to returns accompanied by Form 8379, the “injured spouse allocation.”
You may check the status of your refund after 24 hours of e-filing or one month after mailing in your return by visiting the IRS Where’s My Refund webpage. The webpage is updated daily, usually during the first few hours of the morning.
The following is a breakdown of the average tax refunds given per state for the 2022 fiscal year, from the highest to the lowest:
Amount of Internal Revenue
|State||Number of Individual Refunds Issued||Refunds Issued (in terms of thousands of USD) for Individual Returns||Average Refund Issued Per Return|
Refunds: What to do with them
According to a 2019 GOBankingRates study, 27% of respondents indicated they would use their tax return to pay off debt. Spending your refund as soon as you receive it may be tempting. Debt consolidation is a better option, as it simultaneously lowers your credit use ratio and raises your credit score.
Tax refunds can also be invested wisely in the following ways:
- Investing in a pension plan
- Renovating your property to increase its value
- Increasing your emergency savings funds
- Contributing to charity and claiming the deduction on your next tax return
- Putting money into yourself by enrolling in a fitness or certification course
- Placing the cash to work by purchasing stocks or certificates of deposit
If you get a refund, don’t feel obligated to spend it all at once. You may save the most of it for investments or house upgrades but still indulge yourself with the rest.
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