Receiving a tax refund is a great way to set yourself up for the future. While it might be tempting to splurge on something you want, consider ways that you can use the refund to put yourself in a healthier financial position.
Tax Refund Facts
In 2020 75% of tax payers got a tax refund, according to the IRS
Average individual tax refund amount for 2020 was about $3,000
The IRS typically processes refunds within 21 days
What people plan to spend their tax refund on in 2021
- 54% put the money in savings
- 32% use the money to pay off debt
- 27% everyday expenses
- 12% home improvement
- 10% major purchases
- 8% splurge on a luxury purchase
- 8% on a vacation
- 4% other
9 things to do with your tax refund:
- Make an extra mortgage payment
- Pay down your debt, including credit cards
- Fund an individual retirement account (IRA)
- Make home improvements
- Pad your emergency savings
- Buy a car
- Donate to charity (Donations to qualifying charities are tax-deductible, which can help you cut next year's tax bill)
- Pad your children’s college fund
- Invest in your own continuing education to further your career
How to get your refund faster
- File as soon as possible
- E-file your tax return
- Opt for direct-deposit of your refund into your bank account (ensuring account is in your name).
- Get help – qualified tax preparers help make the process easier
Tax Refund Tips
- Track your refund status through the IRS2Go app.
- Check your paycheck withholdings to ensure the right amount is being taken out. If you decrease your withholdings, your paycheck will increase. Just be sure you don’t owe money.
Sources: NRF.com – 2021 Tax Return Study, GoBankingRates.com, TurboTax
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