The page has turned on another tax filing season and here's the data on what refunds looked like this year.
As of Apr. 21, the IRS reported the average refund amount (aka money taxpayers overpaid the government) in 2023 as $2,753. This is almost a 9% drop from what the average refund amount was last year, which clocked in at $3,012.
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The IRS warned back in November 2022 that "refunds may be smaller in 2023" for various reasons, including the lack of economic impact payments last year and the greater difficulty around deducting charitable contributions.
The tax filing deadline fell on Apr. 18, but if you got an extension on filing your returns, when the time comes do so electronically and choose direct deposit for payment to receive your refund as quickly as possible. Some of the best tax software on the market makes it easy for you to file fast and accurately, in addition to helping you get your maximum refund.
TurboTax
On TurboTax's secure site
Cost
Costs may vary depending on the plan selected - click "Learn More" for details
Free version
TurboTax Free Edition. ~37% of taxpayers qualify. Form 1040 + limited credits only.
Mobile app
Yes
Live support
Available with some pricing and filing options
Click here for TurboTax offer details and disclosures. Terms apply, see below for our methodology.
H&R Block
On H&R Block's secure site
Cost
Costs may vary depending on the plan selected
Free version
Yes (for simple returns only)
Mobile app
Yes
Live support
Yes, costs extra
Terms apply, see below for our methodology.
Cash App Taxes (formerly Credit Karma Tax)
On Cash App's secure site
Cost
$0 federal and state
Free version
Yes
Mobile app
Yes
Tax expert support
No
What to do with your tax refund
Even if your tax refund ends up being smaller this year than last, any windfall of cash — in this case, close to $3,000 — can improve your financial health if you have a plan on how to use it. Since this year's tax season coincides with high interest rates that continue to rise, some money moves are more pressing than others.
For example, your credit card debt is getting more and more expensive as interest rates go up. If you carry a balance on any credit card charging interest, prioritize paying it down with your tax refund to free yourself from that high-interest debt.
A balance transfer credit card can be helpful for those needing to buy some time. The Citi Simplicity® Card offers an introductory 0% APR for the first 21 months on balance transfers (after, 19.24% - 29.99% variable APR; all transfers must be completed in the first four months). That means you can transfer your debt to the Simplicity Card and have almost two years to pay off the balance without accruing additional interest. Just make sure you have a plan for how to pay off the balance in the 21-month timeframe to avoid interest accruing again once the 0% APR period is up.
Citi Simplicity® Card
On Citi's Secure Site
Rewards
None
Welcome bonus
None
Annual fee
$0
Intro APR
0% Intro APR for 21 months on balance transfers from date of first transfer and 0% Intro APR for 12 months on purchases from date of account opening.
Regular APR
19.24% - 29.99% variable
Balance transfer fee
There is an intro balance transfer fee of 3% of each transfer (minimum $5) completed within the first 4 months of account opening.
Foreign transaction fee
3%
Credit needed
Excellent/Good
Terms apply.
Read our Citi Simplicity® Card review.
If you don't have any credit card debt, deposit your tax refund into an accessible high-yield savings account that is offering an above-average return. The Lending Club High-Yield Savings stands out for offering one of the highest yields on your money. It also doesn't charge a monthly maintenance fee nor does it have a minimum balance requirement. You just need an initial $100 deposit to open an account.
LendingClub High-Yield Savings
LendingClub Bank, N.A., Member FDIC
Annual Percentage Yield (APY)
4.65%
Minimum balance
No minimum balance requirement after $100.00 to open the account
Monthly fee
None
Maximum transactions
None
Excessive transactions fee
None
Overdraft fees
N/A
Offer checking account?
Yes
Offer ATM card?
Yes
See our methodology, terms apply.
Bottom line
No matter how small or large your tax refund is, putting it in the right place to avoid — or take advantage of — high interest rates is a smart move to make this year.
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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
As a seasoned financial expert with a profound understanding of tax-related matters and personal finance, I can dissect the intricacies of the information provided in the article with a comprehensive and insightful perspective.
The article begins by presenting data on the average tax refunds for the 2023 filing season. According to the IRS report as of April 21, 2023, the average refund amount is $2,753. This figure signifies a notable 9% decrease compared to the previous year's average refund of $3,012. The IRS had forewarned in November 2022 that refunds might be smaller in 2023 due to various reasons, including the absence of economic impact payments in the previous year and increased challenges in deducting charitable contributions.
Now, let's delve into the concepts and topics covered in the latter part of the article:
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Tax Filing Deadline and Extensions: The tax filing deadline for the year was April 18. The article advises individuals who obtained an extension to file electronically and opt for direct deposit to expedite the refund process.
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Tax Software Recommendations: The article provides information on three tax preparation platforms – TurboTax, H&R Block, and Cash App Taxes (formerly Credit Karma Tax). Each service has different costs and features, such as free versions and mobile app accessibility. The choice of tax software can impact the speed and accuracy of filing, as well as the potential for maximizing refunds.
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Utilizing Tax Refunds: The article suggests strategic financial moves for individuals receiving tax refunds. Given the backdrop of rising interest rates, it advises addressing high-interest credit card debt as a priority. It introduces the concept of a balance transfer credit card, specifically highlighting the Citi Simplicity® Card with its 0% APR for the first 21 months on balance transfers.
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High-Yield Savings Account: For those without credit card debt, the article recommends depositing tax refunds into a high-yield savings account to capitalize on above-average returns. The Lending Club High-Yield Savings is mentioned as a notable option, emphasizing its high annual percentage yield (APY) and lack of monthly maintenance fees.
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Financial Products and Terms: Throughout the article, various financial products and terms are introduced, including balance transfer fees, foreign transaction fees, APY, minimum balance requirements, and annual fees associated with the recommended credit card and savings account options.
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Closing Advice: The article concludes by emphasizing the importance of placing tax refunds in the right financial instruments to navigate high-interest rates effectively, irrespective of the refund amount.
In summary, the article covers a range of topics related to the 2023 tax filing season, including average refund amounts, potential reasons for changes, recommendations for tax software, and strategic financial moves to make with tax refunds based on the current economic landscape.
