Average American set to receive 29% less in refunds this tax season, IRS says – New York Post

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by Shannon Saylor

Americans hit by inflation and waiting for a much-needed cash injection from tax refunds received 29% less in taxes than last year, according to early data from the Internal Revenue Service.

The average refund issued through Feb. 2 totaled $1,395, down $568 from this time last year, according to the IRS. Filing season statistics showed that.

Direct deposit refunds also plummeted, totaling about $4 billion so far in the 2023 tax filing season, compared to $14.3 billion a year earlier, a staggering 71.4% drop.

Average direct deposit refunds also decreased by 25%, from $2,056 to $1,543.

But the IRS didn’t seem concerned about the early decline, noting that this year’s filing season started nearly a week later than last year. Tax season started from January 23rd to January 29th of the previous year.

Considering this, “filing season statistics indicate that all systems are operating smoothly and are off to a strong start for the 2024 filing season,” the IRS said. .

said Daniel Lahill, a Chicago-based certified public accountant. USA Today Early filers may receive a smaller refund because they did not have their withholding tax increased even though they received a raise in 2023.

“While ‘gig’ workers may earn more, their estimated tax liability may not increase and their refund may still be lower,” Rahil added.

Another possibility, Rahil said, is that “some filers may have earned more investment income from a strong stock market, resulting in additional taxes being owed,” according to USA Today. ”.

The 2023 market delivered great results. The S&P 500 ended the year up more than his 24%, and the Dow Jones Industrial Average rose more than his 13%, nearing all-time highs.

The tech-heavy Nasdaq also benefited greatly from a year of advances in artificial intelligence, ending 2023 with an impressive 43% gain.

The IRS expects the data to change as more filers file returns by the April 15 deadline.

“[I]As we get more tax return data, it will be an interesting analysis to see where the next wave of numbers will be,” Rahil told USA Today.

In total, the IRS expects to receive more than 128.7 million individual tax returns. On average, three out of four tax filers will receive a refund.

Taxpayers who file electronically and choose to receive their refund by direct deposit can expect the funds to be deposited into their account within 21 days, the IRS said. However, Americans who mail in their tax returns can expect to wait at least four weeks.

Experts warn that the crackdown is not all about huge tax refunds.

“We need to change the way we think about tax refunds because we have to remember that they are our money to begin with,” said Rebecca Chen, a reporter and certified public accountant. Yahoo!finance.

“And this is a huge problem because we live in a very high-interest, high-debt environment,” she added, adding that overpaying taxes “is essentially donating your taxes. It’s something like that.” [the IRS] Interest-free financing is available throughout the year. ”