It’s that time again: tax season, a period of the year when millions of Americans pull their hair out, dig through old receipts and research endlessly on the Internet searching for tax deductions, tax exemptions and tax papers. It’s indeed a very busy time for everyone from coast to coast.
With just about four weeks into tax season, the Internal Revenue Service (IRS) has already issued 48 million tax refunds, it said in a news release. The tax agency has estimated that the average refund is $3,034, up three percent from the same time period last year. Most of the refunds were deposited directly into taxpayers’ bank accounts.
According to its report issued Thursday, the IRS sent out approximately $147 billion in refunds between Jan. 31 and Feb. 28. During that one month, about 59 million returns were submitted, which is an estimated 40 percent of all the returns it expects to receive throughout the year. Many filers who believe they’ll get a refund will submit their returns earlier than those who will pay.
It discovered that more than half of Americans (52 percent) will use the funds to pay for everyday expenses, such as credit cards, loans and other household items. Close to one-third (30 percent) will allocate the refund into their savings accounts. Only eight percent say they will invest the money.
“As the economy continues its recovery, it’s no surprise many Americans also are focused on their own recovery, paying down debt and improving their current situation.” said Scott Thomas, Investment Strategist at Edward Jones, in a statement.
“That said, we would encourage the nearly one-third who aren’t using their refund on current expenses to instead focus on their future self by investing it in a long-term savings vehicle such as a 401(k), IRA or 529 college savings plan. Time can be your friend – or your enemy, so consider “splurging” on your retirement savings plan. Even if only a portion of the tax refund was invested each year, this offers the potential for more portfolio growth in the long term, and could help to ensure you’re on track as you pursue your retirement goals.”
Other polls usually depict the same kind of information.
The IRS offers an array of options to file – online, phone, mail and in-person. CNBC reported last year that 81 percent of taxpayers filed their returns electronically, which is about 119 million people. Experts say that taxpayers feel filing online is easier, more convenient and eliminates the headaches that usually come with entering the required information on paper forms with a pen and eraser, which then leads the individual to toss it into the recycling bin.
The latest news may come as a positive for the IRS, especially considering how it has been engulfed in scandal since it was reported last year that the federal department has been targeting right-wing, conservative and Tea Party organizations. President Barack Obama, who has been compared to former President Richard Nixon, said a full-scale investigation has been launched.
During the Nixon administration, the president used the power of the IRS to target political enemies. Opponents of the current administration and pundits argue that President Obama has mimicked the actions.
“What’s happened with the IRS is an absolute outrage. It is an abuse of power, and it fits into the pattern of the Obama administration of abusing government power and then misleading the American people about it,” said Texas Republican Senator and Tea Party favorite Ted Cruz. “President Obama needs to tell the truth. When Richard Nixon tried to use the IRS to target his political enemies, it was wrong, and when the Obama administration does it, it’s still wrong.”
Congressional hearings were held again last week.