Can a big tax refund be a bad thing? Experts weigh in.
The deadline to file your taxes is now just weeks away on April 15.
Tax experts say the sooner you file, the sooner you get that refund, if you have one coming.
The average refund amount this year is more than $3,300, according to the IRS. But while many look forward to that big chunk of money, some argue a big refund isn't always a good thing.
After all, tax refunds aren't free money — it's the taxes you overpaid, so you could view it as money you should've had throughout the year.
CBS News business analyst Jill Schlesinger told CBS Mornings big refunds are often a result of people giving up too much from their paychecks to taxes.
She advises you should make some changes if you get a large refund.
"If you get a big refund, one nice thing to do would be, 'Hey, let me change my withholding, let me hold on to my money during the year,'" she said. "Keep your money!"
You can adjust your withholding by submitting a new Form W-4 to your employer. The IRS recommends using its online withholding estimator tool to determine how much you might owe or be refunded depending on your withholding amount.
The idea is that withholding less frees up money you can instead invest, save in a high-yield account, or use to pay down debt throughout the year.
But Jackson-Hewitt Chief Tax Officer Mark Steber warns you could also wind up withholding too little and that can lead to penalties. For that reason, he says most of his clients prefer to bank on getting money back.
"Most people with big refunds spend them wisely, most people with an extra 50 bucks in their pocket on Friday, they're not putting that in a managed index fund or a Roth IRA," he said. "They're treating themselves to something nice, which is fine, but I see far more people come in at the desk, they get a zero refund, or worse, they owe $1,500. Much more problematic in their life."
Ultimately it's about finding what works best for you.
Half of adults surveyed who expected a refund last year said they planned to save some of it, while one-third said they'd use it to pay off debt. The survey was conducted by the National Retail Federation and Prosper Insights & Analytics.
E-filing is the quickest way to get your refund. Despite staff cuts at the IRS, the agency says filing electronically and opting to have your refund directly deposited into your account takes about 21 days on average.
Within 24 hours of e-filing, you can use IRS.gov to check your refund status with the "Where's My Refund?" tool. If you file a paper return it could take up to four weeks.
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