Image source: Getty Images
Tax filers may be in line for more money this year.
Key points
- As of Feb. 18, the average tax refund was $3,536.
- That’s substantially higher than the average refund of $2,815 received in 2021.
- Consider saving your refund or using it to pay off debt rather than spending it on something unnecessary.
When the 2022 tax season first kicked off, filers were warned to potentially expect lower refunds than they got in 2021. That’s because last year, many families received advance payments on the Child Tax Credit, which also got a boost for 2021.
But so far, tax refunds are actually coming in higher in 2022. As of Feb. 18, the average tax refund amounted to $3,536. That’s more than $700 higher than the average refund of $2,815 filers received in 2021.
Of course, it’s too soon to determine what the average tax refund will amount to in 2022. The tax-filing deadline isn’t until April 18, and many filers will no doubt wait until closer to that deadline to get their returns submitted.
But either way, if you’re in the process of working on your taxes, you may be in line for a pretty nice payday once your refund rolls in. And it’s important to make the most of that money once it arrives.
How to maximize your tax refund
A lot of people are eager to use their tax refunds to splurge on something special. The logic is that they’re looking at found money, so they might as well enjoy it.
But one thing you should know about your tax refund is that it really isn’t “free” or “found” money. Rather, it’s your money — money you were entitled to collect in 2021 but didn’t. And so it really pays to put that cash to good use, especially if there are certain aspects of your finances that could use work.
For one thing, you may want to stick that money directly into your savings account if you don’t have a fully loaded emergency fund — one with enough money to cover at least three months of essential bills. Having a solid emergency fund could spare you from racking up debt when unplanned expenses arise.
And speaking of debt, if you’re carrying any at present, consider using your tax refund to pay it off. This especially applies if you’re carrying a costly credit card balance, or any type of high-interest loan.
<…….