Generally, the sooner you file, the sooner you’ll see the money in the bank. The amount that you receive depends on a number of factors, including how much of your income isn’t subject to tax withholding, how many deductions and credits you claim, and how you fill out your W-4, which is the form your employer uses to determine how much to withhold from your paycheck for income taxes.
Even if you’re a procrastinator, file your tax return before April 17, 2018. Or, pay what you think you’ll owe and request an extension to avoid interest and penalties.
What’s the Average Tax Refund?
For the 2017 filing season, which covers returns filed for the 2016 calendar year, the average refund for taxpayers who received money back when filing their return was $2,782 — an increase of 1.2 percent from the $2,750 average refund during the 2016 filing season. The Trump tax plan doesn’t kick in until the 2018 calendar year, so the average refund will likely stay in the same ballpark.
The average tax refund also varies by state. For example, for the 2016 fiscal year, the average across the nation was just over $3,052. However, in Maine, the average refund was just under $2,302 while in Texas, the average taxpayer receiving a refund received just under $3,134. But, before you get jealous of Texans, remember that receiving a tax refund just means you made an interest-free loan to Uncle Sam, and the government is now paying you back for the extra amounts that were taken out of your paycheck.
When Will You Get Your Tax Refund? Here’s When to Expect That Check
What to Do With Your Refund
In a GOBankingRates survey, nearly 43 percent of respondents said they would put their tax refund into savings. Once you get your refund, it might be tempting to treat yourself and spend it. But paying down or paying off debts is a smarter choice — if you pay off a credit card, for example, you can reduce your credit utilization ratio and bump up your credit score. Other financially sound options for what to do with your tax refund include padding your emergency fund, improving the value of your home by tackling home renovations, making charitable contributions that you can deduct from your next return, or investing the money — in stocks or CDs, or in yourself with a fitness or certification program, for example.