My tax refund this year was just $18—why financial experts say that’s a good thing

The IRS has received some 44 million returns so far for tax year 2023, and is issuing an average refund of $3,213, the agency says.

Having filed my return and received my refund, I think it’s safe to say I’m dragging the average down. My federal refund this year was just $18.

Don’t worry, I did it on purpose. In fact, every year, I try to get my refund as close to $0 as possible. One year, I owed the Feds $18 and got a $19 refund from Washington, D.C. I felt like a genius.

And if you like getting a refund, I get it. And so do financial pros — to an extent.

“I think there is a little enjoyment in getting a tax refund because it feels like free money,” says Erika Kullberg, an attorney and personal finance expert and founder of “But I feel like the financially optimal way to think about it is that it’s not free money. You have overpaid the government. And you’ve essentially given the government an interest-free loan.”

Here’s why financial pros say you might be better off if you shoot for a $0 refund.

Tax refunds were your money to begin with

Just as a quick refresher, most employees pay their taxes as they go throughout the year. You direct your employer how much to withhold from your paycheck to put toward your taxes. If, at the end of the year, that amount exceeds what you owe, you get a refund.

In other words, a refund is always your money — it’s just a matter of when you want it, says Michael Wallace, a tax expert and CEO of Greenback Expat Tax Services. “Would you rather have that money the prior year? Or would you rather have it a year later?” he says.

For many taxpayers, this isn’t a rhetorical question. Maybe you consistently use your refund to do something financially productive, such as paying down debt, investing or building an emergency fund. And maybe having more money in your paycheck each month would just encourage you to spend it. In that case, it may not be a bad idea to have the government hold onto it for you throughout the year.

But for many people, the opposite is true, and getting a big chunk of money in the spring comes with the temptation to spend. For those people, it may make more sense to skip a refund and boost your pay throughout the year.

How to turn the interest in your favor

If you got a big refund this year, and don’t want one next year, you can adjust your withholding by filing a new Form W-4 with your company. If your salary doesn’t change much from year-to-year, you can use this year’s tax return as a guideline for what you’re likely to owe next year.

If you want to get precise about it, the IRS’s withholding estimator tool can give you a pretty good idea of what your breakeven point will be for the upcoming year.

Once you’ve adjusted your withholding — congrats! You’re no longer letting the government hang on to your money interest-free. But remember, there’s not much point to paying yourself extra if you’re not going to be productive with the money.

So why not flip the interest situation around, suggests Kullberg.

“When you look at the interest on high-yield savings accounts, you can earn upwards of 4% or 5%,” she says. “Wouldn’t you rather have that money coming directly into your paycheck and then earning 5% on that money? That’s a great outcome rather than waiting an entire year to get a tax refund.”

Say you got the average $3,213 refund this year, and instructed your employer to withhold that much less from your pay next year. If you took the extra money and stashed it in a savings account yielding 5%, you could earn about $73 by the time you’re ready to file next year.

That’s not a lot, but it’s quite a bit better than the goose egg you’ll get from the IRS.

“It takes some planning and some discipline, but it can definitely be worth it,” says Wallace. “70 bucks is 70 bucks.”

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