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February 17, 2022

As Americans begin to file their taxes this year, millions expect to get a refund either via direct deposit or check. Last year, over 128 million Americans received an average refund of $2,775 from their 2020 tax returns, according to the IRS.

However, the IRS has recommended Americans take several steps to fast-track their tax-filing process to ensure they get their refund as quickly as possible.

Here’s what you need to know about how long you should expect to wait for your check from Uncle Sam, how to get your tax refund quicker and what you may consider doing with the money. Our best selections are in your inbox. Shopping recommendations that help upgrade your life, are delivered weekly.

When you will receive your 2021 tax refund, and how to file electronically

Additionally, how you file your taxes can affect how long it takes to track the status of your refund. If you file electronically like the vast majority of Americans do you can start tracking your tax refund status within 24 hours of filing on the Where’s My Refund site. However, if you file by mail, your processing time extends to at least four weeks to see your payment status on the site.

So if you haven’t filed your taxes yet, you may want to consider filing electronically with a tax service like TurboTax or H&R Block to avoid issues like waiting for months to receive your refund or even losing your tax files altogether. Select ranked TurboTax as the best overall tax-filing software and Credit Karma Tax as the best free tax software. These services can help you maximize deductions and increase your refund.

Also, keep in mind that you can file your taxes online for free through the IRS if your adjusted gross income (AGI) was less than $73,000 in 2021.

Through Feb. 4, 2022, over 4.3 million people have received their tax refund at an average of $2,201 per person, according to the IRS. And with many Americans unable to afford a $1,000 emergency, a refund of that size is extremely helpful.

If you receive a tax refund, here are some starting points of where you can send those funds:

  • Emergency fund: Typically deposited within a high-yield savings account, an emergency fund is typically 3-6 months of living expenses stowed away in case of an unexpected event such as: car repairs, home repairs, loss of income or illness. These accounts have a modest interest rate, but it’s better than a typical checking account.
  • Credit card debt: Credit card debt can be a financial killer because of the high-interest rates most cards have. The average credit card debt in the U.S. is $5,500 per card, according to an Experian study published in Sept. 2021. And with interest rates on some cards near 30%, it’s best to pay down this debt as quickly as you can.
  • Student loan debt: Although federal student loan debt interest and payments have been on hold for nearly two years, payments are expected to resume in May. If your student loans (whether federal or private) are large or have an interest rate above 5%, you may consider paying down those debts.
  • Down payment on home: If your high-interest debt is paid down and you’re looking to purchase a home, you could consider throwing your refund into a savings account for a down payment. And with home prices soaring, the needed down payment to secure a mortgage is also going up. The average down payment on a home is now 6%, according to Rocket Mortgage. So on a $400,000 home, you will need roughly $24,000, not including closing costs.

  • Long-term investments: If your debt is low-interest or even eliminated, you may consider filing your retirement accounts such as a traditional IRA or Roth IRA. By doing this, you can allow compound interest to help your money grow. In fact, $2,200 invested into a simple index fund with a modest 7% annual average growth rate over 25 years can grow to nearly $12,000.

Bottom line

A sizeable tax refund can give you a jumpstart to accomplishing your financial goals in 2022. But before you plan on what to put your tax refund to, it’s strongly advised to file your taxes online and opt for direct deposit to avoid any issues receiving your check.