2012 Tax Refunds Smaller Than 2011 Payments


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.

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3 Comments on "2012 Tax Refunds Smaller Than 2011 Payments"

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[…] Only 25% of tax payers will save at least some of their tax refund. […]

Tuesday 9:06 am

Good suggestion on the withholding adjustment for taxpayers getting large refunds. I’d add considering setting up at the same time an automatic paycheck deduction to a savings account to keep ‘take home pay’ about the same after the withholding drops. At the end of a year, the savings account balance will have ballooned to about the magnitude of last year’s tax refund. Except it’s in the taxPAYER’s account, not the taxCOLLECTOR’s!

Monday 10:31 pm

[…] To find out online when the IRS currently expects to issue your refund, check the IRS “Where’s My Refund?” tool which  is updated every Wednesday. You’ll need to provide the following information from your tax return : social security number, filing status and the exact whole dollar amount of your expected refund. If you have an iPhone, download MyTaxRefund, a free iPhone App from TurboTax that allows you to check the status of your refund on your smart phone. [See this article for the average 2012 refund size] […]


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