Smaller Checks
So far this year, the Internal Revenue Service has refunded approximately $172 billion to taxpayers — $16.4 billion less than in 2022. On an individual level, average refund checks have been for $2,903. This is also down from last year by about $360, or 11%.
If you have worked with the same employer over the past couple of years and collect W-2 income, your tax refund could be smaller this year than in years past.
Tax Benefits
The main reason that tax refund checks are smaller this year is because several pandemic-era federal payment programs have come to an end. These include the child-related tax and credit program.
Tax refund checks can provide a windfall of cash for families, which can be a major help in boosting savings or paying down debt. This is especially true right now, with record inflation persisting over the better part of the past year.
Ill-Timed
According to a survey by Bankrate, 75% of taxpayers said this year’s refund would be important to their financial health, compared to 67% last year.
However, it could be helpful to remember that your tax refund is ultimately the government giving you back money you’ve already spent. If you get a large refund, it simply means you paid too much income tax the previous year.
Instead of banking on a large check in April, consider adjusting your tax withholding amounts with your employer. Doing so will reduce the percentage of your paycheck that your employer puts aside for taxes, putting the money in your pocket sooner rather than later.
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The fastest ways to get your tax refund
Learning that you are eligible for a tax refund can be a welcome surprise. And if you have any pressing expenses–maybe you’re behind on a few bills or have been putting off going to the dentist because of the cost–you may be wondering how you might be able to get that money into your hands quickly.
Fortunately, there are a few simple things any taxpayer can do to help ensure that their refund comes as fast as possible. This includes e-filing with the IRS (rather than physically mailing in your return), and also setting up direct deposit, so there’s no waiting for that refund check to come through the mail.
Here are some key steps you may want to take (starting well before April 15th) to help ensure that you get your tax refund ASAP.
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In general, the fastest way to get your tax refund is to file your taxes early, and certainly by the tax deadline. This means that starting in January, you may want to begin collecting all the necessary information for filling out your tax forms, and decide whether you are going to file on your own or hire a tax preparation service or accountant to help.
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To get your refund faster, it’s a good idea to choose electronic filing instead of sending in your return by mail. That way, your refund can begin moving through the system immediately, rather than having to wind its way through snail mail and hands-on refund processing.
A paper tax return can take about six to eight weeks to process, but with electronic filing, or e-filing, taxpayers can typically expect to receive their refund within 21 days.
The Internal Revenue Service (IRS) offers a few options for e-filing.
If taxpayers make an adjusted gross income (AGI) of $72,000 or less per year, then they can use IRS Free File to turn in their tax forms.
For taxpayers whose AGI is greater than $72,000, they can use the IRS’s Free File Fillable Forms service, which lets you simply input your data onto your tax forms so you can e-file (if you choose this option, you’ll need to know how to prepare your own tax return).
The IRS Volunteer Income Tax Assistance (VITA) and the Tax Counseling for the Elderly (TCE) programs also provide help and e-file for taxpayers who qualify. Most states also offer free e-filing options for state returns.
Taxpayers can also use tax preparation software such as TurboTax, TaxSlayer, TaxAct, or H&R Block. You can use these program to file your taxes yourself, or go to a professional who knows how to use this type of software.
The IRS has a helpful tool on their website where taxpayers can find an authorized IRS e-file Provider Locator. All taxpayers have to do is input their zip code and choose what kind of provider they need.
The fastest way to get your tax refund is to have it electronically deposited into your financial account. This is known as direct deposit, and the service is free.
It’s also possible to break up your refund and have it deposited into one, two or even three accounts.
You can set up direct deposit simply by selecting it as your refund method through your tax software, and then inputting your account number and routing number (which you can find on your personal checks or through your financial institution). Or you can tell your tax preparer that you want direct deposit.
It’s also possible to select direct deposit if you’re filing by paper and sending your return through the mail (you may want to double-check to make sure you didn’t make any errors inputting your financial account information).
GaryPhoto/istockphoto
As long as taxpayers have e-filed by the deadline and chosen direct deposit, then the refund should hit their account within 21 days. According to the IRS, nine out of 10 refunds arrive in less than 21 days.
cabania / istockphoto
Once everything is filed, taxpayers can check their tax refund status on the IRS’s Where’s My Refund? page.
This requires inputting your Social Security number or ITIN, filing status and the exact amount of the refund, which can be found on the tax forms that were submitted.
Taxpayers can check Where’s My Refund? Starting 24 hours after e-filing.
The site is updated daily, usually at night. The IRS cautions that you may experience delays in getting your refund if you file by mail or you are responding to a notice from the IRS.
If it’s been more than 21 days and you still haven’t received your refund, you can call the IRS at (800) 829-1040 for help. You may also want to contact the IRS if Where’s My Refund? instructs you to do so.
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Unfortunately, there is currently no way to get a tax refund back the same day. However, if taxpayers are in a bind, some tax preparation services offer 0% interest tax refund loans.
Tax refund loans, also called “refund advances,” allow you to access your refund early, but you may want to keep in mind that tax preparers typically charge fees for filing tax returns.
If you are paying a tax preparer just to get the advance, you’ll essentially be paying a company in order to access your refund. In addition, some providers may charge an additional fee for the advance service.
These short-term loans range from $200 to $4,000. In some cases, there may be a minimum amount your refund must meet in order to qualify for a refund advance (how much can vary from one company to another). Also, you may only get part of your expected refund in advance.
Some companies may offer to give you a prepaid card with the loan amount on it within 24 hours.
Once your tax refund is issued, the tax preparer will typically deduct the loan amount from your refund.
If you’d rather not pay any fees, however, you may also want to look into other options. For instance, if you have bills that are due, it may be worth calling up your providers or credit card companies to see if they can extend their due date while you are waiting for your refund.
Or, if you have a 0% interest credit card, you might want to charge an urgent expense on that card, and then pay it off as soon as the refund comes in.
DonNichols/istockphoto
If you are carrying any high-interest debt, one smart move might be to put your tax refund towards minimizing that debt, or, if possible, wiping it out altogether.
Doing this can help you avoid spending more money just on interest charges, and may also help boost your credit score (which may help you qualify for loans and credit cards with lower interest rates in the future).
Or you might consider using your tax refund to jump-start one of your current savings goals, such as building up an emergency fund, a downpayment on a home or buying a new car.
For an emergency fund or savings goals you hope to accomplish within the next few years, you may want to put your refund in a high-yield savings account or cash management account. These options typically offer a higher return than a traditional savings account, but allow you access your money when you need it.
Your tax refund can also help you start saving for the longer term, such as retirement or paying for a child’s education. Using a tax refund to buy investments can help you create additional wealth over time.
Sean Locke
To get your tax refund as quickly as possible, it’s a good idea to file early, and, if possible, avoid the mail.
That means filing electronically (using the IRS’s free service or tax software, or hiring a tax pro) and signing up for direct deposit when you file.
It’s also wise to keep track of your refund on the IRS site and reach out to the agency if you haven’t received your refund within three weeks.
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syndicated by MediaFeed.org.
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