One reason to look forward to tax time? More money in the bank.
During fiscal year 2014, nearly 116.6 million people—or 79 percent of those filing individual income tax returns—received a refund, according to new data from the Internal Revenue Service. So far this filing season, the government has given back cash to more than 60 million people, averaging $2,938 per taxpayer. People receiving their refund by direct deposit tend to get even more, $3,074 on average.
While that sounds like a nice windfall, it's important to recognize that a refund represents an interest-free loan you made to the government, taking money out of your paycheck year round. It's a sign of poor planning, said Benjamin Tobias, a certified financial planner and certified public accountant based in Plantation, Florida. "They're just giving you your own money back."
With that in mind, if you're on the receiving end of a windfall, it's smart to use that money to better your financial situation. First priority: Pay down high-rate debt, like credit cards, said certified financial planner Neil Waxman, a managing director at Capital Advisors in Shaker Heights, Ohio. Already debt-free? Make sure you have a suitable emergency fund. Then look to setting aside the money for other goals, whether purchasing a home, paying for college or retiring. If you can put the money in a tax-advantaged vehicle like a 529 or IRA, so much the better, he said.
Debt.com crunched the numbers to see how tax refunds stack up state by state. These 10 have some of the biggest, and smallest.
—By CNBC's Kelli B. Grant
Posted 25 March 2015
Individual filers getting refunds: 1,380,358
Average refund: $3,126
Individual filers getting refunds: 9,606,694
Average refund: $3,033
Individual filers getting refunds: 7,543,503
Average refund: $2,963
Individual filers getting refunds: 3,418,079
Average refund: $2,959
Individual filers getting refunds: 1,036,471
Average refund: $2,944
Individual filers getting refunds: 1,346,523
Average refund: $2,330
Individual filers getting refunds: 2,215,957
Average refund: $2,329
Individual filers getting refunds: 361,325
Average refund: $2,299
Individual filers getting refunds: 504,840
Average refund: $2,277
Individual filers getting refunds: 251,272
Average refund: $2,254
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