Generally, the sooner you file your taxes, the sooner you’ll see your refund in the bank (and it reduces the chances of tax fraud). The amount that you receive — if any — 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 filled 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, you’ll want to file your tax return before the May 17, 2021, tax deadline — yes, the federal filing deadline has been pushed this year, although the state deadlines of April 15 do not get pushed as well. And if you think you’re getting a refund, you’ll want to know what to expect and how to protect it.
What’s the Average Tax Refund?
For the 2020 filing season, which covers returns filed for the 2019 calendar year, the average federal tax refund for individuals was $2,707.
The average tax refund also varies by state. For instance, in Maine, the average refund was just over $2,314, but in Texas, the average taxpayer got back $3,191. But, before you get jealous of those living in Texas, 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.
Here’s a look at the average tax refund issued by state for 2019 fiscal year, listed from highest average refund amount to lowest:
|Average Tax Refund by State|
|State||Number of Individual Refunds Issued||Amount of Internal Revenue Refunds Issued (thousands of dollars) for Individual Returns||Average Refund Issued Per Return|
In past years, the IRS would issue most tax refunds within 21 days; however, the agency is taking longer to process all mailed items because of the COVID-19 pandemic. Certain other things can delay the processing of your refund, including the following:
- Incomplete returns
- Returns with errors
- Returns affected by identity theft or fraud
- Returns with claims for the earned income tax credit or additional child tax credit
- Returns with Form 8379, injured spouse allocation, which can take up to 14 weeks to process
Within 24 hours of e-filing, or four weeks of filing by mail, you can visit the IRS “Where’s My Refund” site to check the IRS refund schedule and the status of your refund. Information on the site is updated daily, typically overnight.
What to Do With Your Refund
In a 2019 GOBankingRates survey, 27 percent of respondents said they would put their tax refund toward paying off debt. 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 your tax refund include the following:
- Padding your emergency fund
- Contributing to a retirement plan
- Improving the value of your home by tackling home renovations
- Making charitable contributions that you can deduct from your next return
- Investing the money in stocks or CDs
- Investing in yourself with a fitness or certification program
Remember that you don’t have to make an “all-or-nothing” choice with your refund; you can tuck most of it away in investments or home improvements, for example, but still treat your family to a night out with a small portion of your refund.
More From GOBankingRates
- Money’s Most Influential: Where Do Americans Get Their Financial Advice?
- Everything You Need To Know About Taxes This Year
- ‘Rich Dad Poor Dad’ Author Robert Kiyosaki: You Should Never Say ‘I Can’t Afford That’
- Here’s How Much You Should Have in Your 401(k) Account, Based on Your Age
George Malone contributed to the reporting for this article.
Methodology: In order to discover the average IRS tax refund amount by state, GOBankingRates used the Internal Revenue Service’s (IRS) “SOI Tax Stats – State Data FY 2019” (the latest data available) to find (1) individual income tax and employment tax refunds issued and (2) individual income tax and employment tax total refunds issued in USD. With these two figures isolated for all 50 states, GOBankingRates only had to divide the two to find (3) the average tax refund amount for every state. All data was collected on and up to date as of Jan. 11, 2021.
Last updated: May 5, 2021