Taxes 
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What is the Average Tax Refund?

average tax refundAs 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.

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 Personal Finance 
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5 Ways to Stimulate the Economy with Your Tax Refund

Normally, it’s not that exciting when you’re average… unless you’re talking about tax refunds. The average tax refund this year will probably settle in at over three thousand bucks. Three thousand dollars a lot of money, unless you’re Representative Sean Duffy of Wisconsin, and while many personal finance pundits will tell you that you should pay down debt, save for retirement, or bolster your emergency fund… I’m not. Then again, I’m not a personal finance pundit or an expert!

So, if you are looking for a few good ideas for that fat refund check, here they are:

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 Taxes 
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PSA: File Your Past Tax Returns!

Filing your taxes is not fun. In fact, it’s so “not fun” that many people try to figure out whether they even need to file in the first place. If you’re trying to figure out whether or not you should file your tax return, I recommend this IRS tool called the Interactive Tax Assistant because you should really be asking the IRS, not me or any other “expert.” :)

If you don’t have to file a tax return, you may still want to because you might be due some money. The IRS announced that almost 1.1 million taxpayers didn’t file a return in 2007 and they are owed a combined $1.1 billion in potential refund. Half of that group is owed at least $640 and you have until this year to file a 2007 tax return (you have three years to file a return to claim your refund). Afterwards… the money is theirs forever. Also, if you do file a 2007 return to get your refund, you’ll also have to file a 2008 and 2009 tax return to make sure you don’t owe anything to the tax man.

Finally, while you’re at it, you should research if you have any missing money out there.

Good luck!


 NEWS 
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Some Americans Plan Fun for Tax Refund

The National Retail Federal did a survey recently that asked Americans what they were going to do with their tax refund this year. 13.2% said they would be buying a big ticket item like a new television or some furniture, up from 12.5% last year. 11.9% plan on taking a vacation, which is more than the 10% who planned on taking a vacation with it last year. 29.7% went with the ho-hum answer of spending it on everyday items.

Before you start complaining about people being irresponsible, it turns out that most people will either pay down debt or put it towards savings. 41.9% will use their tax refund to pay down debt, 42.1% will be using it for savings. What’s interesting is that since 2007, the percentage of respondents who said they’d pay down debt went up and then down, peaking at 48% in 2009. 41.9% is the lowest it’s been since 2007, when it was 43.1%. Savings rates, however, have been steadily increasing since 2008. (One caveat, this was a survey of what people planned on doing with their refund… how many actually saved or paid down debt is another story!).


 Taxes 
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How to File an Amended Tax Return

1040A few years ago I was preparing my taxes with TurboTax when I reached a piece of information I didn’t have (nowadays you can flag it as a place to return to before finalizing your return). Rather than leaving it blank, I put in a placeholder value… and promptly forgot about it. I filed my return, printed out a copy (this was before I decided going all electronic was a better option), and went about on my business. A week or so afterwards, as I was reviewing my return before filing away, I noticed I had put in a placeholder value.

It was for self-employment income and I had put in a nice round $10,000. My actual earnings were slightly higher and all of it was reported on a Form 1099-MISC, so the IRS knew that I made more than $10,000. Plus, $10,000 on the nose is awfully suspicious, especially since I was being 1099′d from about a dozen different places. So I knew I had to file an amended return and I found it to be, relatively, easy. Unfortunately, it’s paper only.

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 Taxes 
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Government to Issue Debit Cards for Tax Refunds

Plastic is a very real part of our society. Indeed, cash is rarely used as we pay with credit or debit. The government has long let taxpayers use credit cards to pay their taxes, and now the government is trying to decide if it is worth it to issue debit cards to those expecting refunds. Bankrate.com reports that a pilot program will be used to see how taxpayers react to receiving a Visa debit card in the mail instead of a paper check.

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 Taxes 
14
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EFiling Tax Return

I was reading the instructions for the Where’s My Refund tool on the IRS.gov website when I spotted this little gem:

You can generally get information about your refund 72 hours after IRS acknowledges receipt of your e-filed return, or three to four weeks after mailing a paper return.

Within 3 days, the IRS is ready to rock and roll on an efiled tax return. It takes twenty one to twenty eight days for them to start on your paper return. If you have a tax refund, you should be efiling because you can get your refund two to three weeks faster.

Another protip – go with the direct deposit option because then you won’t have to wait or worry about a big check going through the postal system.


 Personal Finance 
29
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Growing Your Tax Refund

Growing RefundsThe average tax refund for 2009 is around $3036, up over 10% on 2008 returns. It’s a pretty sizable sum when you think about it. It’s a really nice vacation, a good bit of a mortgage payment, and your credit card debt’s worst nightmare. If, however, you’re more of a saver than a spender, you might be curious how large that amount can really be.

Ever wonder how much $3036 would be in 5 years if it were in a certificate of deposit? A Treasury bond? How about invested in stocks? What if you just left it in cash? What about ten years? Twenty? Forty? Let’s find out.

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