About 30% of Americans are relying on their tax refund checks to make ends meet, according to a study from Credit Karma. However, a change in tax rules pertaining to charitable contributions coupled with the end of stimulus programs will likely translate to smaller refunds this year.
The average refund issued to taxpayers in 2022 was $3,039, up from $2,827 in 2021, according to figures from the Internal Revenue Service.
Tax refund checks are often the biggest check that Americans receive each year. And 29% of Americans polled by Qualtrics on behalf of Credit Karma say they’re expecting their refund to increase this year, which means they may be disappointed. Nearly a quarter (24%) are planning to use that check to pay for necessities; Gen Z (40%) and millennials (46%) count on the tax-time cash infusion the most.
While it’s not a new thing for Americans to rely on their refunds to help cover bills and household costs, this year’s record inflation makes taxpayers’ situations more difficult. More than two-thirds of Americans (68%) say their financial picture did not improve from last year, according to Credit Karma. Meanwhile, inflation peaked at 9.1% in June 2022 and closed out at 6.5% at the end of the year.
To help keep pace with inflation, though, the IRS raised its standard deduction to $25,900, up $800 from the prior year, for couples. For single taxpayers and married individuals filing separately, the standard deduction rises to $12,950 for 2022, up $400. Nearly nine in 10 tax filers take the standard deduction.
According to the survey results, about 37% of Americans plan to use their refunds to build their savings accounts and another 31% plan to allocate the money to paying down debt.
The IRS warns that you shouldn’t rely on your refund coming by a certain date, especially if bills are in the balance.
“Try not to rely on receiving a refund by a certain date, especially when making major purchases or paying bills,” the IRS tweeted last year.
A tip from the #IRS: Try not to rely on receiving a refund by a certain date, especially when making major purchases or paying bills. Some returns require additional review and may take longer to process. See: https://t.co/cmJJnyvABL pic.twitter.com/ScwMw7j6eV
— IRSnews (@IRSnews) March 29, 2022
However, the quickest way to get your refund is to electronically file an error-free return and opt for your refund to be paid via direct deposit.
By Brittany Anas, for Scripps News.
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