A lot of Alexandria and Fairfax County residents are going to get tax refunds this year, and if last year’s taxes are any indication, the average will be more than $3,000.
A recent study by financial technology company SmartAsset ranked the localities with the largest tax refunds (or payments) in Virginia. Fairfax County ranked second with an average refund of $3,612. The City of Alexandria ranked sixth in the state with an average tax refund of $3,200.
City of Falls Church led the list, with residents receiving an average of more than $3,700.
To determine the top areas for refunds, the study divided the total amount of money refunded by the IRS to residents by the number of refunds given out in each county.
Those who owe taxes April 15 will be facing some hefty bills. The average tax bill in the City of Alexandria is $6,125. In Fairfax County, the average is even higher at $7,254. Topping the list: Falls Church city residents, who owed an average of more than $12,000.
Ouch.
Many people see tax refunds as a good thing — a surprise windfall they can use to pay off credit cards, resupply an emergency fund, or splurge on something special like a vacation.
But some people would prefer a much smaller refund and would rather have that money in their paycheck every month instead of being taken out for taxes.
“For some people, having a larger refund can act as a savings account,” said Sarah Locke of Old Town Tax Consultants. “The way you strategize your taxes comes down to being honest with yourself about your spending habits. If you are likely to spend the extra money in your paycheck and not save it you may want to have more withheld. If you are great at saving and want to earn interest, then have less withheld.”
What if you owe taxes? Tax season is a good time to review withholdings (the amount taken out of your paycheck automatically) and deductions to make sure your tax bill is smaller next year.
“The best thing that you can do this year to owe less next year is to sit down with a tax expert,” Locke said. You can lower the amount you owe on April 15 by increasing your withholdings and by spending money on things that lead to deductions. Those can include starting a business, buying a home, certain investments, donations, some retirement account investments and more.
