Just how much the average American is slated to get back in their tax refund varies, but how much you get back can influence what you do with your money. Here's a look at the average tax refund and how it could help you get the car you need.
What is the average tax refund amount? According to the IRS website, the average tax refund that filers are getting back is $3,305. By March 18, 2022, 3.8% more tax returns were processed than in 2021 and the refund amount is higher, too.
The average amount returned is also up $376 from the $2,929 average returned to taxpayers last year, and it's the highest recorded return amount, according to Cox Automotive – 13% higher than the return amount pre-pandemic, in 2019. The figures from the IRS website also show that the number of total refunds received by this same time last year is up 4.1% year-over-year.
How much will I get back in my tax refund? How much you're entitled to get back depends on your income and how you file in a given year. Your employer is responsible for collecting tax withholdings. If they take too much, you get a refund. If they take too little, you will owe the government money. You can check an online estimator to see how much you might receive.
Tax filing season opened on January 24th, and according to the IRS, taxpayers who e-file and have direct deposit should receive refunds in around 21 days of filing, if there are no issues with their return. Now could be a good time to speak with a tax professional since rules and regulations can change year to year. This year's tax filing deadline is April 18.
How can my refund help with a car? If you're one of the millions of Americans who receive around the average tax refund amount, it could go a long way toward helping you get the car loan you need. The average recommended down payment amount for a car loan is around 10% of a vehicle's selling price for used and around 20% for new cars, though your situation may vary.
If you're a borrower with bad credit (a FICO score below 670) the typical car loan down payment requirement is around $1,000 or 10% of the car's selling price. However, the more you can put down, the better it is for your loan in the long run. Putting more money down means borrowing less, and means fewer interest charges to pay over the life of your loan.
The amount you get back in your tax refund depends on many factors, but the more you get back the more potential you have to put the money toward something you really need, like your next vehicle. We recommend speaking with your dealer about finding the right down payment based on your unique situation.