The average tax return has increased per taxpayer over the past year. On average, early tax filers are seeing an increase of $200 per taxpayer in their refund, which reflects approximately a 9% increase.
There are a few reasons for the increase, partly due to tax changes that have been put in place to benefit taxpayers starting last year. For example, there has been an increase in the child tax credit, and also a slight increase in the earned income tax credit for low-income families. There are also higher deductions for education including deductions for tuition and fees.
Deciding how many exemptions you want withheld from your wages primarily dictates whether you will receive a larger refund in the spring or receive more money each pay period in your paycheck. That is a decision each taxpayer must make. If you find yourself receiving a large refund in the spring and would rather have the extra money in your paycheck, you can alter your W-4, the form used to calculate your exemptions and the amount of money withheld in tax.
For some, receiving the larger refund in the spring helps save money and you may look forward to receiving the large amount of money at one time. Altering your refund can be challenging as well; if you increase your exemptions to reduce the amount of tax withheld, you may increase your chances of not having enough tax withheld and run the possible risk of having to pay tax to the IRS.
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