I just found some data from the IRS on tax refunds, for the previous tax year (2019), which I found interesting (and hope you do too).
Let’s look at the numbers:
- As of November 20, 2020, 168,650,000 tax returns have been submitted.
- 152,802,000 of the 168,650,000 returns, or 90.6%, of returns were e-filed (impressive). This is a 10.6% increase over last year.
- And 125,299,000 of the 168,650,000 returns received refunds (not impressive).
You know what that means…
It looks like Tax Refund Windfall Syndrome (TRWS) got the best of us once again!
Average Tax Refund:
The math works out to just over 74.3% of all returns resulting in a refund.
The average tax refund works out to $2,535 in 2019.
This means that Uncle Sam received an average of $2,535 in interest-free loans from 125,299,000 lenders (aka taxpayers), for a combined $317.7 billion. And this is a lower number than it should have been, given that many people who did not file returns filed this past year in order to receive COVID-19 relief checks from the federal government.
What a waste!
How does last year stack up against the historical average?
Average Historical Tax Refund:
Over time, the historical average tax refund has gone up and down, but here is a look at the last number of years.
- Average 2008 Tax Refund: $2,728
- Average 2009 Tax Refund: $3,036
- Average 2010 Tax Refund: $3,003
- Average 2011 Tax Refund: $2,913
- Average 2012 Tax Refund: $2,803
- Average 2013 Tax Refund: $2,651
- Average 2014 Tax Refund: $2,952
- Average 2015 Tax Refund: $2,793
- Average 2016 Tax Refund: $2,857
- Average 2017 Tax Refund: $2,899
- Average 2018 Tax Refund: $2,979
- Average 2019 Tax Refund: $2,535
If you’re looking to dig in further to some data, check out the IRS individual income tax database.
If you received a refund, put it to good use! Here are the best ways to use your tax refund, in order to get a strong ROI.
And remember, if you’re expecting a large tax refund, you can change your withholding with Form W-4 to increase your withholding, and owe more taxes at the end of the year. It may seem counter-intuitive, that sending a check or getting a smaller one is good, but that is the case.
Tax Refund Discussion:
- What was your tax refund this year? Were you happy, sad, indifferent?
- Do you aim to decrease/increase your refund next year?