The average tax refund tops $3,000 so far this year

Here’s what you should do with it

WASHINGTON »

Millions of Americans can’t wait to get their tax refunds, but this year it might be wise to save that windfall rather than spend it.

As of Feb. 28, the average refund this tax season was $3,064, according to the IRS. At the start of tax season, the average refund was $1,869. And as more folks filed their returns, the average refund has steadily increased by almost 64%.

One of the most frequent questions I get from people about their refund is about how fast they can get it. With direct deposit, it won’t take very long. The IRS says it issues nine out of 10 refunds in fewer than 21 days.

While you’re waiting, if you have a question about your refund, use the “Where’s My Refund?” tool available at irs. gov. You can also download the “IRS2Go” app to check your refund status, or call 800-829-1954 for an automated update.

You can start checking the status of your refund 24 hours after the IRS has received your e-filed return or four weeks after mailing a paper return. Once your return is processed and your refund approved, “Where’s My Refund?” will provide a date when you can expect to receive your money.

You may be anxious about the status of your refund,

but the IRS says its customer service representatives won’t be able to update you unless it’s been 21 days or more since you e-filed or it’s been six weeks since you mailed your return.

An overwhelming majority of Americans getting a refund said the money is important to their overall financial situation, with 11% indicating they need the funds to pay day-to-day expenses, according to a recent survey by CreditCards.com.

Among Americans expecting tax refunds this year, 24% said they’d use it to pay down debt. Thirty-one percent plan to save the money, which is smart given the economic uncertainty surrounding the coronavirus.

There’s been a lot of focus on the stock market reaction to the coronavirus. The significant drops in the various investment benchmarks have workers worried about their retirement accounts. But far more people may be impacted in their everyday financial lives.

“Everyone is talking about how to manage their retirement fund, but few are talking about other large financial decisions,” one reader wrote during my weekly online discussion. “Should people hold off on large purchases?”

If you are already financially stretched, don’t use your tax refund to buy anything that’s not a necessity right now.

Perhaps your refund was going to be “fun” money. I would nix that, too. With the spread of the coronavirus, you might also hold off on using the money for a vacation or that big-screen television you might have been eyeing — especially if you’re in an industry that could see a downturn as a result of the outbreak. Fewer people may be out shopping or eating at restaurants.

A few thousand dollars from a tax refund could go a long to pay some bills should your income drop because you become ill or have to be quarantined. If schools are closed but you still need to head into the office, you could use the cash to pay for daycare.

I’m not trying to scare you, but you should be asking: How will I manage if my employer decides to impose a furlough and force me to take leave without pay? What if I run out of paid sick leave?

The Centers for Disease Control and Prevention (CDC) has issued guidance to employers to “actively” encourage workers to stay home if they’re sick. The CDC is recommending that employers ensure that their sick leave policies are flexible.

“Employers should be aware that more employees may need to stay at home to care for sick children or other sick family members than is usual,” the CDC said. “Talk with companies that provide your business with contract or temporary employees about the importance of sick employees staying home and encourage them to develop non-punitive leave policies.”

The CDC can ask, but how likely is it that the vast majority of employers will be so accommodating? Will they give folks all the time off they need with pay?

And while I’m an advocate for aggressively paying down debt, put a pause on that, too. For example, don’t use your refund to make extra credit card payments, because

Perhaps your refund was going to be “fun” money. I would nix that, too. With the spread of the coronavirus, you might also hold off on using the money for a vacation or that big-screen television you might have been eyeing — especially if you’re in an industry that could see a downturn as a result of the outbreak.

you may need that cash for rent or to pay your car loan.

A lot of serial refund recipients view this money as a forced savings strategy. If that’s you, this year that lump sum could come in extra handy in the event that the coronavirus infects your income.

Readers can write to Michelle Singletary c/o The Washington Post, 1301 K St., N.W., Washington, D.C. 20071. Her email address is michelle.singletary@washpost.com. Follow her on Twitter (@ SingletaryM) or Facebook (www.facebook. com/MichelleSingletary). Comments and questions are welcome, but due to the volume of mail, personal responses may not be possible. Please also note comments or questions may be used in a future column, with the writer’s name, unless a specific request to do otherwise is indicated.