Did you know that the average tax refund is over $2,800? That’s a lot of money! In this blog post, we will discuss 10 surprising facts about tax refunds. We will cover everything from how long it takes to receive your refund to what people do with their refunds. If you’re expecting a tax refund this year, be sure to read this post!
1. Tax refunds aren’t always a good thing – in fact, they can actually be harmful to your financial health
When you receive a tax refund, it means that you gave the government too much money throughout the year. This can be harmful because it means you’re not taking advantage of your full income potential. It’s better to adjust your W-4 (W-4 is the form you fill out when you start a new job) so that less money is withheld from your paycheck.
Refunds can also have a psychological impact. A study by the National Bureau of Economic Research found that taxpayers who receive refunds are more likely to spend than those who don’t. This is because people view tax refunds as “extra” money, which can lead to overspending and debt problems down the road.
If you do get a large refund, be sure to use it wisely. Invest it in a high yield savings account or use it to pay down debt. Don’t blow it on something unnecessary!
2. Most people file their taxes incorrectly
The IRS estimates that around 60% of people file their taxes incorrectly. This is a staggering number! The only way to ensure you’re filing correctly is by hiring an accountant or tax professional, but this isn’t an option for everyone due to cost issues.
If you do choose to prepare your own return, try using online software like TurboTax or H&R Block. These programs are user-friendly and can help you avoid making common mistakes.
If you’re still unsure about something, don’t hesitate to call the IRS helpline or consult a tax professional. Nobody is perfect, and that includes tax preparers!
3. The average tax refund is about $3,000
According to the IRS, the average tax refund in 2020 was $3,000. This number can vary greatly depending on your income and filing status (single vs married). If you’re expecting a large refund this year, be sure to use it wisely!
If you want more money throughout the year instead of one big lump sum payment once per year, consider adjusting your W---- so less money is withheld from each paycheck. This way you’ll have access to more funds throughout the year and won’t be as tempted to spend it all in one place like many people do with their tax refunds.
It’s also important not too underestimate how much money you’ll owe in taxes. Many people don’t realize just how much tax they’re actually paying until it’s too late!
4. You don’t have to wait until the end of the year to get your refund – you can file now and get your money sooner
One of the best things about tax refunds is that you don’t have to wait until the end of the year to receive them. If you file your taxes now, you can get your money sooner rather than later.
Keep in mind that if you file early, you’re taking a risk because there’s always a chance that something could go wrong with your tax return.
5. You can use your tax refund to pay down debt or invest in your future
Many people use their tax refund to pay off debt or invest in their future. This can be a great way of making the most out of any extra income you receive throughout the year! You may even want to consider applying for an Adjustable Rate Mortgage (ARM) which has lower interest rates than fixed rate mortgages so it’ll save money on your monthly mortgage payment.
If you’re looking to invest your refund, there are a variety of options to choose from. You can invest in stocks, bonds, or mutual funds. Or you could use it to start up your own business! The possibilities are endless.
6. A large portion of tax refunds go towards buying things like cars and TVs
Many people use their tax refund to buy big ticket items like cars or TVs. It’s easy to see why this would be the case – you get a large sum of money all at once without having earned it yourself and so there are no immediate consequences for spending it on something frivolous instead of saving up for retirement later in life!
The problem here is that these big ticket items aren’t investments which means they won’t increase in value over time. This means when it comes time for you to sell your car or TV, you’ll get less money than what was originally paid out initially due to depreciation (i.e., wear and tear).
There are other ways of using this extra income. If you’re planning on buying big ticket items anyways, it might be better to take advantage of sales throughout the year rather than waiting for your tax refund to arrive at one time only once per year.
7. Tax refunds are typically distributed by direct deposit or check
The IRS typically distributes tax refunds by direct deposit or check. This is the most efficient way of getting your money to you as quickly as possible!
If you’re expecting a tax refund, be sure to provide your bank account information when filing your taxes. This will ensure that the funds are deposited directly into your account without any delays.
8. There are several ways to get your tax refund faster
If you’re expecting a tax refund, there are several ways to get it faster. You can file your return as early in the year as possible or take advantage of Refund Anticipation Loans (RALs) which provide immediate funds while waiting for the IRS to process your return and issue payment electronically into an account designated by them.
The drawback to RALs is that there are typically associated fees so it’s important to do the math and make sure you’re getting a good deal. The interest rates on these loans can be as high as 20% so it’s definitely something to think carefully about before deciding whether or not this is the right option for you.
Another way of getting your refund sooner is by e-filing your taxes. The IRS typically issues refunds within 21 days of receiving an electronically filed return so this can be a great option if you’re in a hurry to get your money!
9. Most people receive their refunds within 21 days of filing their taxes
The IRS typically issues refunds to people who e-file within 21 days of receiving an electronically filed return, so this can be a great option if you’re in a hurry to get your money! If you don’t want any delays then it’s important that all information on the return is accurate and complete before submitting online or mailing out paper copies by mail.
In addition, make sure your bank account details are correct when filing electronically as this will ensure that any funds owed to you go straight into an account designated by them rather than waiting around for payment once it’s processed manually through snail mail which could take up to six weeks or longer!
10. Most people get tax refunds every year
In most cases, people receive tax refunds every year. This is because they’ve overpaid taxes throughout the year through their payroll withholdings or by making estimated tax payments.
When you file your taxes, the IRS will compare what you actually owe with what was previously withheld from your paycheck or paid in as estimated taxes. If there’s a difference, you’ll either receive a refund or will have to pay the difference.
It’s that time of year again – tax season! And while you’re waiting for your refund, it can feel like an eternity. But there are ways to make the wait more bearable with these 10 surprising facts about tax refunds. For example, did you know… Well, stay tuned for more updates and tips on how to get through this difficult period in one piece!
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