Based on the first week of data from the IRS, Americans will receive smaller tax refunds this year. Average refund amounts are down 8.4% as compared to last year.
Employees who owe money should speak with their employer about increasing their tax withholding. This will result in a slightly smaller paycheck, but it will decrease the amount due for the 2019 tax year. Check the IRS website for withholding tables that offer guidance about how to optimize an individual tax refund situation. While many Americans depend on their tax refund each year, it may be wise to increase withholding and put the small amount of extra income included with each paycheck into an emergency fund.
Americans making less than $66,000 per year can file at no charge through certain tax services offered by the IRS for free. This represents great savings, as it can cost hundreds of dollars to get professional help with filing taxes.
A tax refund represents an interest-free loan offered by consumers to the government. Those who are interested in improving their money-management habits may find there’s an advantage to allowing that money to earn interest in a savings account as opposed to waiting more than a year for a tax refund.
