IRS tax refunds are 5% higher in 2024 so far - here is how much YOU can expect (as free filing directly with the IRS launches in 12 states)

The average tax refund is over 5 percent higher so far this year, latest data from the Internal Revenue Service (IRS) has revealed. 

As of figures ending March 1, the agency has issued just over 36 million refunds totaling over $115 billion. 

On average, taxpayers have received a refund of $3,182 - up 5.1 percent from the typical $3,028 rebate at this point last year.

The number of tax refunds received so far is 13.7 percent fewer than last year, but the filing season also began a week later, signaling a 'strong start', according to the agency. 

But some experts warn that while a refund may seem like a windfall, overpaying taxes means missing out on using the money during the year.

The average tax refund is over 5 percent higher so far this year, according to the IRS

A refund is money that you overpaid to the IRS which it has been holding until you file your tax return. 

With every paycheck, your employer withholds some of your earnings for taxes such as Medicare and Social Security, with the amount depending on how much you earn. 

A survey by Bankrate earlier this month revealed that almost half of Americans expecting a refund this year plan to put the money toward a savings account or paying off debt.

Fewer will spend their refund on day-to-day expenses or so-called 'fun money.'

'Americans are planning to be practical with their tax refunds this year,' said Ted Rossman, senior industry analyst at Bankrate

Some 28 percent plan to use the money to boost their savings, while 19 percent will pay off debt - including credit card debt.

While many Americans have traditionally seen the day their refund check comes through the mail as 'the biggest payday of the year', only 7 percent plan to spend it on a vacation, and 4 percent plan to splurge on retail purchases, it found.

'Americans are planning to be practical with their tax refunds this year,' said Ted Rossman, senior industry analyst at Bankrate. 

It comes as the US Department of the Treasury announced Direct File - the free tax filing program from the IRS - is now fully open in 12 states. 

'Dozens of countries have provided free tax options to their citizens for years,' Deputy Secretary of the Treasury Wally Adeyemo said.

'American taxpayers who want to file their taxes for free directly with the IRS should have that option.'

The service is open to taxpayers in Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington and Wyoming.

Americans who live in participating states, have simple filing needs and who report certain tax credits and deductions on their tax return, can create an account and file their taxes any time, the IRS said.

This service is different to Free File, which allows certain taxpayers to file a return free of charge with a tax preparation company. Free File is typically for Americans with an adjusted gross income of $79,000 or less.

While it started as a pilot program, Treasury officials hope at least 100,000 taxpayers will be able to take advantage of the Direct File service in the final weeks of this season. 

IRS Commissioner Danny Werfel said the agency has 'a responsibility' to offer Americans different approaches for how to meet their tax obligation

According to a report from the Economic Security Project, within five years the program could save the average filer $160 per year - and hours of their time. 

It projects it could collectively save $11 billion annually between filing fees and time costs. 

'By breaking down barriers to filing, Direct File would also deliver up to $12 billion each year in additional tax credits to low-income families currently missing out,' it reads. 

The launch comes amid backlash from the private tax filing industry. 

But when asked about the program last month, IRS Commissioner Danny Werfel said the agency has 'a responsibility and an authority to offer taxpayers different approaches for how to meet their tax obligation.'