When the 2022 tax season kicked off, filers were warned to expect potentially lower refunds than they got in 2021. Indeed, last year many families received installments on the credit child tax, which has also been increased for 2021.
But so far, tax refunds are actually higher in 2022. As of Feb. 18, the average tax refund was $3,536. That’s more than $700 more than the average refund of $2,815 filers received in 2021.
Of course, it’s too early to determine the average tax refund amount in 2022. The deadline for filing tax returns isn’t until April 18, and many filers will no doubt be waiting closer to that. deadline for submitting their declarations.
But either way, if you’re busy working on your taxes, you could be in line for a nice payday once your refund is done. And it’s important to make the most of that money once it arrives.
How to maximize your tax refund
Many people are eager to use their tax refunds to splurge on something special. The logic is that they are looking for found money, so might as well take advantage of it.
But one thing you should know about your tax refund is that it’s not really “free” or “found” money. It’s rather your money – money that you were entitled to collect in 2021 but did not. And so it’s definitely worth putting that money to good use, especially if there are some aspects of your finances that could use some work.
For one thing, you might want to put 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 save you from going into debt when unexpected expenses arise.
And speaking of debt, if you currently have any, consider using your tax refund to pay it off. This especially applies if you have an expensive credit card balance or any type of high interest loan.
If you’re ready for some emergency savings and don’t have any unhealthy debts to deal with, your tax refund could still be useful to help you target longer-term goals. This may include building savings for retirement, setting aside money to buy a home, or setting aside funds to open a small business or go back to school.
How much will your refund be?
The amount of your tax refund can change from year to year, and the amount you get this year will depend on your income in 2021, how much tax you’ve already paid, and how much money you have. already received for your child tax credit, if this applies to you. You may also be in line for a higher refund because you haven’t received your full stimulus payment in 2021.
In any case, take your time to complete your declaration so that you can obtain the full refund to which you are entitled. And if you’re not sure if you’re using numbers correctly, ask for help. Using tax software or paying a tax preparer a few hundred dollars may be worth it if it increases your refund by a much larger sum.
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