Filling the Gaps
US consumers got some welcome news last week, when the December CPI showed prices shrank 0.1% from November. Still, year-over-year inflation checked in at 6.5%, highlighting just how much Americans’ spending power diminished in 2022.
A survey from Credit Karma (INTU) suggests tax refunds are increasingly important in this inflationary environment, with 30% of Americans admitting they’ll rely on the extra cash to help make ends meet. Younger respondents were even more likely to say that’s the case, with 40% of Gen Zers and 46% of millennials saying the payment is essential to their finances.
3 in 4 Ready for a Refund
Credit Karma says close to 75% of Americans expect a tax refund in 2023. It will also represent many employees’ most significant one-time payment of the year. Amid persistent inflation, that additional cash can help pay for home repairs, childrens’ activities, family vacations, or simply padding the emergency fund.
On the downside, the IRS has issued warnings that 2023 refunds may be smaller than what people expect. That’s because many pandemic-era tax breaks have expired, including the larger child tax credit and more generous charitable deductions. For reference, last year’s average refund was almost 14% higher than in 2021, as of late October.
Speeding Things Up
The easiest way to expedite the tax process – and receive your return, if you’re entitled to one – is to file electronically. Not only does it take longer for mailed documents to be processed, but there’s also the inherent risk of it getting delayed, or even lost.
The IRS typically issues refunds within 21 days, but if you send in a paper return, expect it to take longer. Choosing direct deposit for your refund is also advisable for the same reasons.
Finally, double check what you send in. An incorrect Social Security number, inconsistent data across forms, or other errors made on returns are one of the most common reasons for delays. You should also file your return as soon as possible in order to speed things up: tax season opens for individual filers this coming Monday, January 23.
Want faster access to your refund? Set up direct deposit payments to your SoFi checking and savings account and you could get paid up to 2 days early.
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