Sure, many people absolutely dread the thought of facing yet another tax season. Who wants to catalog all those charitable contributions? And dig for every last receipt? And waste time heading to a tax office somewhere?
But plenty of people file in February because they just can’t wait a second longer to get their hands on all that tax refund cash. They’re on edge about the size of their tax refunds, and they’re far from alone.
Roughly 60 million individual tax filers typically file a federal income tax return by the end of February – or nearly 40% of the individual income tax returns filed for the tax year.
Call it tax refund anxiety.
We’re anxious because that once-a-year tax refund check is our ticket to paradise.
“Feeling like you’re flush for a moment, that’s very powerful at a time when a lot of people don’t have a lot of slack in their budgets,” said Jonathan Morduch, professor of public policy and economics at the New York University Wagner Graduate School of Public Service.
The tax refund often is the single largest chunk of money they will see at once. It’s a windfall that can plug holes in a budget. Or money that can be used to cover a few dreams along the way, maybe a weekend trip in the summer.
The average federal income tax refund was $2,869 in 2019 based on returns filed through Dec. 27, 2019. That’s down slightly from an average of $2,910 in 2018.
If you file your tax return electronically, you can often anticipate receiving a refund within 21 days. Yet many of us think that’s even too long to wait.
“Often people who are living close to their means have built up debt and they see the tax refund as a way to clear a chunk of that debt,” Morduch said.
“They might have built up debt over Christmas and the tax refund is an important part of squaring their balances.”
Credit card balances keep climbing, after all, and hit $880 billion in the third quarter of 2019, according to data from the Federal Reserve Bank of New York.
All the debt that consumers are carrying, of course, means that many budgets are already stretched to the max.