What are Tax Rebates?

Will You Get a Tax Rebate?

Tax rebates are issued when people pay more taxes than they owe. They may have overpaid based on the amount withheld from their paycheck or from conservatively estimated tax payments. Taxpayers have an option of receiving a paper check or direct deposit for their tax rebate.

What’s the Average Tax Rebate?

Last year, the average tax refund was nearly $3,000. That’s quite a bit of money that can be spent wisely if you plan ahead. Some people use their tax refunds to help them reach some financial goals that they have, such as:

• paying down/off a credit card
• starting/building an emergency fund
• saving up for a down payment on a house

We used our tax refund to reduce our mortgage. In past years, we’ve been able to speed up the process of paying off our car loan, fund a vacation, and set aside money in savings.

Some people prefer getting the money in one lump sum, while others make adjustments on their withholding from their paychecks. You have to weigh the pros and cons of each option based on your financial habits. Speaking of rebates, when you file your taxes, how quickly can you expect to get it? E-file normally gets your refund in your hands faster. Used TurboTax? Here are a few free ways to track your tax refund once you’ve filed.

Increasing Your Tax Rebate Legally

You don’t have to do anything shady to get a bigger refund. You can increase your tax rebate by making sure you take all your  tax deductions and tax credits that you’re entitled to. Since tax credits and deductions change year to year in some cases, it’s best to get professional advice on the topics. Tax preparation software like TurboTax can make it incredibly easy to find what you need.

Thoughts on Tax Rebates

How about you? If you got a tax rebate last year, how did you use it? Do you prefer getting a tax rebate or do you adjust your withholding to compensate?