The IRS recently published some statistics on 2011 tax returns (filed in 2012, excluding extensions) which revealed some interesting factoids, such as:
- If you got a refund this year, chances are that it was lower than the one you received in 2011. The average tax refund amount paid by the IRS through the end of April 2012 was $2,716, or $106 lower than the 2011 average refund of $2,822.
- While direct deposit is by far the fastest way to get your tax refund, it is also looks like the more rewarding with the average direct deposit refund coming in at: $2,923 (though still lower than the 2011 average of $3,044)
- Of the 111 million tax refunds e-filed, approx 70 million were done via a preparer, vs about 41.5 million being self-prepared. Despite the abundance of tax filing software, it seems like more people like the comfort of a professional when filing their returns.
While it’s always nice to receive money from the IRS, rather than paying them, a refund is basically a free loan to the IRS via overpayment of your taxes through the year. If you are consistently getting a larger than average refund, chances are you are withholding too much in taxes from your paycheck or other income sources.
To correct this and in essence get your refund payment through the year, adjust your paycheck withholding. You can find many withholding calculators online, including at the IRS. Once you estimate your correct withholding submit an updated form W4 to your employer’s payroll department and enjoy your larger take home pay when the next pay period rolls around.