MINNEAPOLIS (WCCO) – It’s been a week since the IRS and state started processing your tax returns. That means they’re working on getting refunds to the majority of Americans.
So, what is the average return? Good Question.
In 2019, the IRS processed 155 million individual returns. About 71% came back with a refund. That’s down two percentage points from 73% — the 5-year average. This was over the time where a new tax law was passed and withholding tables were changed.
The average federal refund from 2019 was $2869. That’s right near the 5-year average as well. For the state of Minnesota, the average refund was $924.
According to Teresa Radermacher, a CPA and tax director at Redpath and Company, there are pros and cons to getting a big refund and can depend on the individual.
“If you’re not disciplined to save money, you can have more withheld from your paycheck,” Radermacher says. “Then you get a large refund and forced savings account.”
According to the National Retail Federation, half of people planned to save their tax refund, while one-third planned to use it to pay down debt. Another 22% said they’d use it for everyday expenses, followed by vacation and home improvement. Only 9-percent said they’d use it to splurge.
“My personal opinion, it’s probably not good to get a refund because that means the government — federal or state or local government — has had your money for twelve months,” says Radermacher. “You could have used that money to spend it on something or invest it.”
Breaking down the average refund by paycheck – assuming paychecks come every other week – comes to $111 per paycheck.
To change the withholdings in each paycheck, Radermacher says to make changes to your W-4. The IRS has a calculator to help figure out the numbers.