THERE’S a crucial method to calculate how much you’ll owe in taxes this year, and you may not want a big refund.
Experts have warned Americans that it could mean they’re not watching what’s being taken out of their checks closely enough.
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Some eight million Americans who submitted their returns to the Internal Revenue Service (IRS) have already gotten refunds.
Data has shown that they’re around 32% lower than last year.
That’s not such a bad thing, at least, according to what some experts told USA Today recently.
David Alvarez, a financial advisor with PAX Financial Group, said that he prefers taxpayers walk away not owing anything but also not getting anything back.
KEEP A CLOSE EYE
To him, a considerable refund could mean that Americans are overpaying on taxes during the year from their paychecks.
“I typically don’t want our clients to be getting a huge refund,” Alvarez noted.
“If you’re overpaying, it’s not like the government pays it back with interest.”
“You obviously don’t want to be surprised with a huge tax bill, and there could be penalties for underpayment. So as close as you can get to net zero is ideal,” he added.
Alvarez also called for more transparency about what Americans will owe or get in a refund during tax season ahead of time, rather than it being “a mystery.”
“It really should be something that you know, the government knows, everybody knows what you owe,” the financial advisor said.
Fortunately, there is a way to make it less of a mystery, and that’s by closely monitoring your tax withholding and liability during the year.
Writing that information down or consulting a professional for help with keeping an eye on it could make what you owe or get back during tax season less of a surprise.
It’s also a good idea in case you ever need to file for an extension.
Those Americans who already know they struggle with saving could alternatively use the larger tax withholding to their advantage.
2025 Tax Season
Tax season started on January 27 and folks must have theirs completed filed on April 15.
Those who fail to file by that time may face penalties.
However, taxpayers who need more time may file for an extension – this gives them until October 15.
The way to do this is by filling out Form 4868, the Application for Automatic Extension of Time To File U.S. Individual Income Tax Return.
This can be done by mail, online with an IRS e-filing partner, or through a tax professional.
While there’s no set schedule, the IRS revealed that taxpayers may receive refunds within 21 days of filing.
Just be sure to avoid making mistakes on any forms as that could tack on extra time.
Those filing through mail will likely get their returns within a month or could even face delays as the IRS processes millions.
As of January 31, the average refund amount totaled $1,928, per the IRS.
This is compared to the $1,395 for the same period in 2024.
The average direct deposit refund for 2025 was even higher, the IRS said, at $2,069.
To check the status of your refund, The IRS has an online tool called Where’s My Refund?
This works within 24 hours of e-filing and generally within four weeks of filing a paper return.
REFUND REWARD
Leaving out more than what’s required for taxes each paycheck could be a not-so-risky way to get a considerable refund.
That’s all fine and good, but San Francisco wealth advisor Rachel Elson told USA Today that doing that requires Americans to be extremely strict about what they use the refund money for.
“But if you’re going to do that, then you have to commit to doing something productive with the refund money,” Elson emphasized.
The wealth advisor said the funds would be best used toward paying down high-interest debt, contributing to an emergency savings or a retirement fund.
Some last-minute tips have also been advised by the IRS recently to avoid delays on any refunds.
It’s also useful to take advantage of the agency’s Where’s My Refund? online tool, which helps check the status of your refund within 24 hours of filing an electronic return.
Certain Americans should also double-check if they’re eligible for $900 in unclaimed tax returns.
Millions are set to score a $7,830 “earned” tax credit this year as well.
