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What is the Average Tax Refund?
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As of March 22nd, the average tax refund stands at just a hair under three thousand dollars. At this time last year, the average was a little over that amount, sitting at $3,030 (the average for last year would later fall to $2,803 as later filers were accounted for).
As is always the case earlier in the season, this average will likely go down. It’s usually higher because people due refunds tend to file earlier than those who are not expecting one. If you were due a refund, it may make sense to adjust your tax withholding as you don’t want to give Uncle Sam 25% of your income.
I wanted to dig a little deeper on the question of average income tax refund because nearly three thousand dollars seems really high but it actually isn’t. It took a bit of searching but after some research into their SOI Tax Stats page, I was able to glean a few gems about the average tax refund.
2013 Tax Statistics
As of March 22nd, we’ve seen 80.4 million returns, which is a 5.2% drop from this time last year. All the various filing season statistics are down this year, including the tax refund amount (down 1.5%). The one surprise in all this was the increase in self-prepared returns compared to tax professionals. There’s a 0.9% increase in the number of returns that are being self-prepared – I think that’s a great. Another great statistics is the percentage of filers requesting direct deposit refunds is higher than last year – folks are wising up! Don’t wait for a check, get your refund faster.
2012 Tax Statistics
As of April 27th, nearly two weeks after the end of tax season, the average tax refund dipped slightly from two weeks ago to $2,716 as more returns were filed. They’ve now processed 126.3 million returns of a total 133.5 million received with 99.1 million refunds. The number of direct depositors increased to 78 million with a total amount of refunds hitting nearly $228 billion. A stunning figure that’s only 0.3% higher than the amount for last year.
As of April 13th, they have processed over 105.7 million returns out of 109.2 million. Not surprisingly, 69.7 million taxpayers opted for direct deposit and their refund was slightly lower at $2,762. What I’d like to know is why nearly 20 million refund eligible taxpayers didn’t opt for direct deposit, why not get your money sooner? At least they’re increases in totals over last year.
Historical Average Tax Refund
In previous years, the average tax refund has been in the same range, with the average peaking for the 2009 tax year before slipping:
- Average 2012 Refund: $2,803
- Average 2011 Refund: $2,913
- Average 2010 Refund: $3,003
- Average 2009 Refund: $3,036
- Average 2008 Refund: $2,728
- Average 2007 Refund: $2,699
If you’re a stat junkie and glean anything remarkable in those IRS stats, please let us know!
(Photo: doncav)
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so are early filers just the ones who are entitled to more or is there a correlation with amount based on time of filing? like am I losing money by waiting?
The only thing you lose is interest on your money if you wait, you don’t get more by filing early. No causation here.
Well, I suspect that there is causation … but that it is the expectation of a refund that makes some people file earlier, rather that the timeliness affecting the refund.
If you owe money, why on earth would you file earlier than necessary? If you’re getting a refund, why wait?
Note that the date you pay doesn’t have to be the same date you file. But I agree basically with what you said.
Lets not forget about extensions also….
An extension to file is not an extension to pay. Funds are still due 4/15, or penalties will ensue.
People with an income of under $25,000 are most likely eligible for the Earned Income Credit, which explains their large refund. This is not accounted for by witholding. In addition to filing a W4 to adjust their witholding, they should also file a W5 to get part of the EIC in advance. They should only do this if they know they will be eligible. People with 1 child can earn up to $35,000-$40,000 and still be eligible for the credit. The more children you have, the more you get.
I agree with this statement. I think that most of these people file pretty accurately, with the exception of adjustments for EIC.
Looking at how much taxes a $25k income would owe:
1. Filing single: $3,331.25
2. Married filing jointly: $2912.50
Assuming they pay nothing during the year, this is how much they would get back… without EIC. Hopefully, these numbers put the statistics into better perspective.
Oops… if they pay nothing during the year, then that is how much they would owe.
Actually, their situation is far better than that. If a married couple made $25K and had (for example) 2 kids, they would have a standard deduction of $11,400. On top of that they would have 4 exemptions reducing their taxable income to $0. Then, they would get a $2,000 credit for 2 kids and $4,269 for the EIC. So essentially, they’d pay no tax and get $6,269. IF they had actually had any withholding, you would add that on to the total!
Even in the “best case” of a single person with one child just barely qualifying for the EIC, (again with a salary of $25K), they would only owe $386 in taxes. Any withholding over that amount would be returned.
Commenting about the single person filling with a child under 25,000 a year is that the parent that’s filling the child what about the other paying child support ?
I was once a single parent and needed every penny to get by so I adjusted taxation accordingly. I never got a huge tax return even with a house and child to claim. Always seemed to bump myself into the next tax bracket with over time and/or a second job. If I owed money, I always waited till the deadline and if I got a refund I filed as soon as I could. How can any one live on $25 thousand?
These are not necessarily single household incomes. I am part of the under 25,000 and I am a student working part-time. As far as I know, the employment stats do not separate employed from part-time employed. It is one of the reason i think the media keep claiming this recession is good for women. I know so many women that are employed, but now only part-time, when before they had better jobs.
I lived on half that, if not less in college (including tuition + books).
very carefully…im mexican and i do it
I live in an expensive part of bucks county pa on about 16k a year. It’s all about budgeting.
can i move in ifyou are a female
I lived on 10,000 a yr with 3 kids and did just fine and am a single mom that gets no child support so it can be done.
If u only made like 6000 in the whole yr and have three kids and claim head of household would u get a decent amount
no they told me 596.00
I just finished my taxes last night and I owed money. Sucked enough last night. Now it really sucks knowing on average I should be getting about $2500! Thanks.
Take solace in the fact that you have apparently maximized your take-home pay throughout the year, and that it was the Federal Government that gave YOU the interest-free loan, and not the other way around.
My old ex-father-out-law was a small independent businessman. He would have to pay on tax day, and so, he always submitted his return at the very last minute. It gave him a great deal of amusement.
It’s hard to believe that the average refund is that high. I adjust my withholding every year so I usually get a refund of a couple hundred dollars at most.
Some people look forward to their refund. They have no other way of saving throughout the year so this is it. They might be surprised this year when they find out their refund isnt as much because the gvt adjusted their withholdings for them via the “Making Work Pay” program
We got slightly over $5k back and it’s already in the bank.
Hi
Im trying to figure out if the refund my husband is supposed tog et is too high sounding? He made about $35,000 and I made a few hundred in 2009, he supports me does $4k ish sound like alot?!!
I work with some guys that put off paying any of their taxes as long as possible, not just when April comes around. They crank their exemptions up as high as possible at the beginning of the year so that there’s little to no taxes being taken out of their paychecks and then at the end of the year all of their last two or three months worth of paychecks are paying only federal income taxes.
I guess they figure they get to earn a couple hundred dollars in interest on the money throughout the year. It’s strange but I can see where if you’re paying $50k+ in taxes like most people I work with do, the 9-10 months of interest is worth it. I’d be careful using this strategy though because if you miscalculate and owe too much one year then the IRS will make you pay quarterly tax installments in addition to what’s being automatically taken out of your regular paycheck.
Jessica:
These guys need to be careful; unless they are paying estimated taxes, chances are they are getting socked with an additional penalty for underpaying during the year.
In theory that should work. As long as you are not required to file estimated taxes (ie you paid enough last year, or you are within 90%?? of current year) you dont need to pay estimated taxes. At the end of the year, their W-2 should show withholdings equal to what it would have been throughout the year then they wont have to pay estimated the next year and the cycle repeats itself.
Like I said, in theory it should work, but I wouldnt advise it.
According to the Internal Revenue Service, over 75% of American taxpayers received refunds last year; those refunds averaged $2,171 each. I prepared my sample tax return using turbotax, expresstaxrefund and hrblock. My refund was same on all 3 websites.
I think most people don’t know about withholding (or at least know enough). I have a lot of friends who get big refunds every year not realizing they were entitled to the money earlier.
The only thing that really surprises me is the 18% who owe money and send it in earlier than they need to.
Better to get it out of the way then forget about it. It’s not like people are earning gobs of interest on money these days.
Social Security benefits are taxed very lightly (or not at all) which brings the AGI way down for senior citizens and there are a lot of us out here.
Average refund statistics are very misleading, precisely because of things like EITC and the child tax credit (which for many low-income taxpayers becomes refundable entirely or in large part).
If you are a single person making $25,000 per year, paid biweekly, and claiming one withholding allowance on your W-4, your employer would have withheld about $2002 for federal taxes in 2009, and you would actually owe $1568 with one personal exemption and the standard deduction. With the $400 Making Work Pay credit, that yields a typical refund of $834.
My refund was more than double the average mainly because I sold some company stock options and they take out 40% immediately.
Wow 40% is pretty high for withholdings. You would think it would be capped at the highest personal tax rate, which isnt 40%.
Very surprised that the average refund is so high. Thanks for pointing this out.
I just did my taxes and am getting huge refund this year. $6k I lost my job last summer, I think that’s why. I still have my usual deductions. Substantially less household earnings after job was lost.
How and why do some people get more money back than they pay? By the way I was born in America and my parents were also, but this is way out of hand.
Mark:
The tax code is not just simply a revenue-raiser; it is also designed to implement government policy initiatives, many of which are designed to encourage certain behaviors. For example, the American Opportunity Credit and the Lifetime Learning Credit are designed to encourage people to enroll in institutes of higher education; the Earned Income Tax Credit is designed to encourage people to work rather than living entirely off the dole; and so on. One side effect of those policy decisions is that some people wind up getting refunds that are larger than what they actually owe in taxes.
I finished my 2009 taxes and was very suprised at the high refund. My husband and I both work and we run a small farm. Due to the poor economy the farm did not do well and with the extremely high deductions allowed for equipment we purchased the farm showed a loss that offset all but 20,000 of our wage income. With all the credits plus getting our witholding back, our refund was almost 17,000. This seems extreme but I checked it with three different tax prep programs before being comfortable enough to file. We have 2 children and we are both taking college classes. so with EIC, Child tax credit and America opportunity credit..I feel like we’ve won the lottey. It just seems weird that our country is so far in debt yet we are handing out high refunds over and above what was paid in.
All parents get the child tax credit. Rich parents, poor parents, all get $1000 per kid. I like that kind of credit because it isn’t just the rich getting the tax break. It is equal for poor or rich regardless of income. So if you make little enough to not pay much in taxes, you still get the $1000 to help raise your child.
I especially like this credit this year because our first child was born!
Another reason people get a lot of money back is tuition. The Hope Credit and the Lifetime Learning Credit give people tons of money back that they pay in to tuition. I took classes this year, and since I live in the midwest which is considered a disaster zone, I get 100% of my tuition back up to $2400 dollars. Since I paid more than the 2400, I get all of that back, plus my withholding.
Hi…i need help. i just had a child last september..and i am only getting 250 dolars. I was unemployed and only my husband made money. What are we doing wrong? Whats EIC? arent we suppont to get at least 3k?
I am really confused. In 2009 I made about 21k, paid federal taxes of approx 1900, and got back 1200.
This year I made 28k, paid federal about 3500, and am only getting back 1700. It does not seem right to me.
I was pretty frustrated this year too, because my refund this year ($550!!) is WAY less than last year ($1,500). The difference is that I made about 19K last year and 33K this year. I payed a LOT more taxes, obviously, but because I made more than 25K (like you did this year versus last), we are not eligible for the EIC credit. I was really looking forward to getting more back (since I payed in more than double), but I guess that’s just how it is.
Heh, definitely not living high on the hog here, but I’m no longer below the poverty line either.
the more you make in the year the less you you get at taxs my wife and i have this problem every year we both work year round and make around 32000 last year we got 3900 back this year we only got 2100
We get between $6500 and $7500 a year on our tax refund! We are not tempted to spend that income by giving it too the government as a “free loan.” However, if you are that disciplined, then take it home each pay period and earn the meager 3 percent (gaining about $200.00 or slightly more per year in a savings account, etc). My girlfriend earns $10,000 or more a year doing the same thing … she uses that refund to pay for her child’s private school tuition. Something “always” comes up if you have the cash… without it … you learn to do without too!
thats very smart of her, you never know what’s going to come up during the year!!!
Brittani, If you want a larger refund at the end of the year, claim fewer dependents on your W2. Thus, you pay more each pay period or your take home is less but the refund is larger.
Britanni, correction, your W4 not W2.