How Americans Are Using Their Tax Refunds
For many Americans, an annual check from Uncle Sam offers a rare opportunity to better their financial footing, and fewer adults these days want to blow it on an excursion. On average, taxpayers expect to receive $3,030 back from the IRS.
And after a slow start, the average refund is now up to $3,143 for the week ending Feb. 22, according to the IRS. That’s just about on par with last year’s figures. Paying down bad debt with a tax refund could be the ideal decision
With consumer debt at a record high, more 86 million Americans now say they are afraid they’ll max out their credit card when making a large purchase. Just about 1 in 10 said they would rather use their refund to invest, make a major purchase on a necessity or put it in a savings account.
The IRS has been reminding taxpayers to review their W-4 throughout 2018, asking them to ensure that they are withholding sufficient taxes from their pay. If you withhold too little, you’ll see more cash in your paycheck in the near term but your refund will be smaller or you may even owe money to the IRS. A large refund says that the government just held on to your money through the year, while it could have been producing dividends and interest in your hands instead.
Here’s why getting nothing back from the IRS might be a good thing: Neither owing a balance nor receiving a refund is an indication that you paid exactly the amount of tax liability you owed. In fact, more than one-third are not expecting to get a tax refund at all this year.