Despite weeks of warnings, many people were in for some disappointment when the average tax refund was a good deal smaller than a year ago. The average tax refund was $2,972. It was down 11% from 2022. This figure is for early tax filers whose returns were processed up to March 10. The data was posted online by the Internal Revenue Service.
It is interesting to note that the IRS issues around 4 million extra refunds om 2023 when compared to last year. it marks an increase of 8.5% in the first seven weeks of the 2023 Tax Season that started in the last week of January this year.
Time It Takes To Get Your Tax Refund In 2023
While tax season is a period of apprehension for most people, for those expecting a tax refund, it is a period to look forward to. For most, the tax refund will hit their bank account within three weeks of filing. But the period might vary based on how you file, or your mode of filing. The timing also depends on how you receive the tax refund amount.
If extra money is expected to come your way from the tax authorities, you could spend it to decrease some debts, build an emergency fund, or set up retirement goals and start investing. And this is when you can expect to get your possible refunds.
While for most taxpayers the tax refund time is three weeks from the day of filing, if you are expecting a paper check from the US Postal Service, it should take much longer, maybe even three weeks more.
For taxpayers who have gone for paper filing but expect their payment in direct deposit, the waiting period should not be more than three weeks. But for those expecting a paper check the waiting period should be more than a month.
The highest period is for taxpayers who file their returns on paper and receive their tax refund payments through the mail. In such a case the waiting period might stretch to over two months. The waiting period may be even longer in certain cases, such as when the authorities suspect discrepancies in the return.
You can check the status of the tax refund on Where’s My Refund on the IRS website or also on the IRS2Go mobile app.
What To Do With The Tax Refund Amount?
Even if the tax refund check is going to be smaller this year, any form of windfall matters a lot in the present economic scenario. A stimulus check worth around $3,000 can jumpstart your financial recovery if you have a clear roadmap on how to use it. As this year the tax season coincides with generous interests on offer, it makes sense to invest some of it. And the interest rates have continued to rise for some time now.
Credit card debts are increasing by the day as interest rates go up. So a balance on any credit card that charges high-interest rates should be a priority issue. You need to pay it down with your tax refund and free yourself from that high rate of interest.
In such a situation a balance transfer card is helpful for those wishing for some breathing time. For instance, Citibank offers an introductory 0% on their Simplicity Card for the first 21 months of the balance transfer. And then a variable APR that shifts between 18.49% and 29.24%. the transfers must be completed in the initial months.
That indicates that you have the freedom to transfer your debts to the Simplicity Card and get another 2 years in which to pay off the balance. You will not accrue additional interest on it. All you need to do is devise a plan on clearing the balance within 21 months and avoid further interest when the zero percent APR period runs out.
Tax refund beneficiaries who do not have any credit card debts can deposit the tax refund into accessible savings accounts that have a high yield. These offer above-average returns. Some offer higher yields on your money and also do not charge any monthly maintenance fees. These also may not have any minimum balance stipulation. You would just need an animal initial fee to open an account.
Thus, the tax refund size should not impede as it could set you on the road to take advantage of it by avoiding high-interest rates, such as in high-cost credit cards.
Why Are The Number Of Refunds So High This Year?
For the uninitiated, the abrupt jump in the number of tax refunds this year can be unsettling. This is especially true if you consider that some of the major tax breaks linked to the pandemic have been discontinued since the 2023 tax year. Already over 49.2 million refunds have been sent in a little more than a month by March 10 in the US.
for those looking for simple tax returns and tax returns, it would be difficult to pin it down to one single cause. The IRS has been silent on this issue as to why there have been so many more refunds this year compared to the previous tax year (2022). But experts say that it is more a combination of factors this year.
While tax season is a period of stress and hassle for many, many taxpayers are looking at less bother this year. Ironically, it has much to do with the absence of many of the federal stimulus checks, including the Child Tax Credit stimulus check. Unlike in 2022, tax filers do not have to produce letters from the tax authorities to prove how much money they receive through the year and claim their tax refunds.
Man people who are due refunds were still able to file their returns earlier this year as they did not have to spend time ensuring that the return they filed this year is as complicated as in the past. The same is also true for the economic impact payments and the RCC, the Recovery Rebate Credit, which this year is not part of the federal income tax return.