Tax refunds are highest on average for people in these states
Many taxpayers receive a refund from the IRS. Not all are equal.
According to an analysis of LendingTree’s IRS data, some taxpayers receive significantly higher refunds after filing their tax returns. According to the latest data available, the average refund in 2018 was around $ 3,660, according to the study.
However, taxpayers in about 13 US states had average refunds in excess of the national amount, while taxpayers in 37 states received smaller checks from the IRS.
Overall, it is difficult to determine why some states have higher average tax refunds because there are so many individual variables that go into calculating the IRS’s debt to taxpayers, according to Erika Giovanetti, a writer at LendingTree.
Family size, income, living conditions, work area and more can all affect the way people pay their taxes, she said. Taxpayers living in lower cost of living states that also have some of the highest average refunds – like Wyoming and Florida – are likely to find the money farthest away.
“These taxpayers are really enjoying the greatest benefits of the tax season,” she said.
Why you’re getting a refund
Taxes are regularly due as you earn income, and for most Americans, the levy is deducted from each paycheck and sent to the IRS by their employer. Those who are gig workers or have some other income are generally required to make estimated quarterly payments to the IRS.
In 2020, nearly 170 million people filed tax returns, and the IRS issued around 126 million refunds, which is roughly 74% of all applicants.
This year, as of April 2, the IRS has received more than 93 million individual tax returns and sent more than 62 million refunds. This means that so far around 67% of taxpayers have received money back from the agency. The average refund size so far is $ 2,893.
The amount that the employer deducts from each paycheck for tax – the withholding tax – is chosen by the employee based on circumstances such as family size, if he is the head of the household or even dependent on someone else.
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At the end of the year, when you file taxes, you are essentially settling with the IRS – letting them know how much money you made over the year and seeing if you overpaid or underpaid your liability. If you are underpaid, you owe the IRS, and if you paid too much, you will receive a refund.
It’s important for Americans to understand that year-end refunds aren’t free money or a bonus, but rather something they owe – it’s their money that they overpaid when they get back to them.
It also means that some people choose to adjust their withholding taxes so that more of their income goes to them rather than the federal government. If you’ve had a big refund and don’t want that much off your paycheck, now is the time to adjust your withholding tax.
Of course, some Americans might have bigger than normal refunds this year. If you were eligible for any of the three economic impact payments and you didn’t receive them or should have received more money, filing a tax return and claiming the recovery discount credit is the only way to get the funds back. It will either settle your debt or add to your total repayment.
How long do you have to request a refund?
The IRS extended the individual filing season to May 17, but if you owe money, that’s a hypothetical date, according to Adam Markowitz, a registered agent at Howard L. Markowitz, PA CPA in Leesburg, Florida.
If you overpaid to the IRS there is no late filing penalty, the agency will not reduce your refund and you can still get the money you owe as long as you file a tax return and file it within three years of the original filing deadline.
“It’s not a physical, tangible hard stop or you won’t get your money back,” Markowitz said.
That means taxpayers owed a refund will likely have until May 17, 2024 to claim the money owed by the IRS. And because the filing deadline has been postponed this year, people who haven’t applied for a refund as of 2017 but have owed one will have until May 17 to submit their late tax returns to the IRS.
According to the IRS, if you didn’t file a tax return for 2018 and 2019, you may not get your 2017 refund immediately. However, there are other reasons to file – aside from applying for a refund, you may also be able to get other credits such as the tax credit for earned income Claim income.
The IRS is still sticking to unclaimed refunds of $ 1.3 billion from 2017, the agency said in April. It is estimated that half of the refunds owed are more than $ 865.
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