Significant Decrease in IRS Tax Refund for Current Filing Season, Nearly 30% Lower
Tax season is in full swing, and taxpayers across the country are eagerly awaiting their annual tax refunds. However, this year, many Americans may be disappointed to find that their refunds are significantly lower than expected. The Internal Revenue Service (IRS) has reported a nearly 30% decrease in tax refunds for the current filing season compared to the previous year.
According to statistics released by the IRS, the average federal income tax refund for the 2024 filing season is $1,395 as of February 2nd. This is a significant decrease from the refunds received during the 2023 filing season. The IRS attributes this decrease to a delayed start of the filing season. Last year, the filing season began on January 23rd, while this year it started seven days later on January 29th.
Despite the decrease in refunds, the IRS assures taxpayers that the filing season is off to a strong start, with all systems running smoothly. They also note that refund amounts are expected to increase as the IRS is waiting to issue certain credits, such as the Earned Income Tax Credits (EITC) and Additional Child Tax Credits (ACTC), which are prohibited by law from being sent before mid-February. These credits will be issued by February 17th to early filers.
Although current refunds may be lower, some experts predict that taxpayers will see bigger refunds overall this year. Mark Steber, chief tax information officer at Jackson Hewitt, believes that refunds for some taxpayers could rise by double digits compared to last year. Elevated inflation forced the IRS to adjust many provisions in 2023, resulting in higher standard deductions and raised tax brackets. Steber explains that if a person’s income didn’t keep pace with inflation, they could see a better refund this year.
Tax refunds are crucial for many households as they represent the largest annual cash injection into their budgets. Many households use the refunds to boost their savings or reduce their debts. To maximize their refund, taxpayers should ensure they select the right filing status. For example, a person whose spouse has died can file as a widower for two years, allowing them to claim double the standard deduction.
Additionally, taxpayers who have made energy-efficient upgrades to their homes, such as installing new doors, windows, or insulation, can claim tax credits under provisions of the Inflation Reduction Act. These credits can further contribute to higher tax refunds.
For those eagerly awaiting their refunds, the IRS offers multiple ways to receive them, including paper checks, U.S. savings bonds, mobile payment apps, and prepaid debit cards. However, the fastest way to receive a refund is through direct deposit. Taxpayers who choose this option will have their refunds deposited into their checking, savings, or retirement accounts.
In the event that a taxpayer does not receive the refund they expected, there could be errors in their returns or the refund may have been used to pay off federal or state debts. Taxpayers will receive notifications explaining any changes made to their refunds. If a refund check is missing or destroyed, taxpayers can request a replacement check by contacting the IRS.
While current tax refunds may be lower than expected, experts predict that overall refunds for the 2024 filing season will be higher. Taxpayers should ensure they take advantage of all available credits and deductions to maximize their refund. With proper planning and understanding of the tax laws, taxpayers can make the most of this annual cash injection into their budgets.
