Which is better, a big refund or more money throughout the year? Payroll tax withholding tweaks let you make the choice
February sure lived up to its status as the shortest month of the year. We got to the end of it, and the potential tax moves to make, so dang quickly.
Today means we're almost halfway through with the 2015 tax filing season, which officially began on Jan. 20.
So far, the Internal Revenue Service reports receiving almost 50 million tax returns. That's about a third of third of what the agency expects to get this year.
As usual, especially early in the filing season, most of the 1040s have resulted in refunds.
Through Feb. 20, that's the case for almost 83 percent of the 2014 tax year returns submitted to the IRS.
And the average refund check through the third week of February is $3,120.
Tax returns received, refunds issued
Feb. 21, 2014, compared to Feb. 20, 2015
|IRS Action||2014||2015||Percentage change|
|Tax returns received||49,558,000||49,651,000||0.2|
|Tax returns processed||48,335,000||48,295,000||-0.1|
|Total refunds issued||40,389,000||39,964,000||-1.1|
|Average refund amount||
|Average refund amount||$3,116||$3,120||0.1|
That is a nice chunk of change.
The tax cash payout is even larger for folks who had their federal refunds directly deposited so far this year. The IRS says the 38.6 million taxpayers who had their tax-back cash electronically sent to a savings or checking or other financial institution account got an average refund of $3,218.
Time to adjust your withholding? While I totally understand the appeal of getting a big check from Uncle Sam, you might want to consider spreading that money across your full tax year.
Using the overall average of $3,120 that's $60 more each week. The directly deposited average of $3,218 comes to almost $62 extra every week.
Think of how many more groceries you can buy or utility bills you can pay or even how many extra dinners out you can enjoy during the year.
The choice is, of course, yours. Some folks aren't good with managing their money and need the forced savings of an annual federal tax refund.
But if you can handle having a bit more cash in hand each paycheck, consider adjusting your withholding. Today's Daily Tax Tip has the details on this relatively easy and painless process.
More tax tip advice: How to adjust your payroll withholding is just one of the five tax tips posted this week. There's also help on how to track down that big old Treasury check if it still hasn't arrived.
The complete list of daily tax advice for Feb. 23-27 includes:
- Tax breaks to cover college costs (Monday, Feb. 23, 2015)
- Adoption tax credit (Tuesday, Feb. 24, 2015)
- Tax help to take care of your parents (Wednesday, Feb. 25, 2015)
- Where's my tax refund? (Thursday, Feb. 26, 2015)
- How to adjust payroll withholding (Friday, Feb. 27, 2015)
Total tax tips coverage: This week's five items are part of the now complete February tax tips special blog page.
Check it out if you missed an individual tax tip when it was posted Monday-through-Friday in the upper right corner of the ol' blog's home page or one of these regular Friday end-of-week round-ups.
You can find more tax tips on January's page. March's tax tip page will start Monday, with the April tax tip collection just a couple of weeks down the tax filing season road.