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Tax refunds are much smaller so far this year, IRS says

Early data released by the IRS shows that tax refunds so far this year are significantly lower than the same period last year.

The average refund check so far this year is worth $1,395 as of Feb. 2, about 29% lower than the $1,963 average recorded last year.

This is based on approximately 2.6 million tax refunds worth a total of approximately $3.65 billion.

However, the IRS warns taxpayers that the average refund amount may change in the coming months as more returns are processed.

Also skewing the picture is that Americans expecting to receive the Earned Income Tax Credit, tax cuts for low-to-moderate income workers, and child tax credits won’t legally receive their refunds until mid-February. there is a possibility.

The average refund check is approximately 29% lower compared to the $1,963 average recorded last year. Anthony Wierut – Stock.adobe.com

The reduction in refunds could be a concern for millions of Americans who rely on inflows from Uncle Sam to make big purchases, save for retirement or pay off debt.

On top of that, millions of taxpayers continue to suffer from high inflation, causing the prices of basic necessities like food and rent to soar.

Taxpayers typically receive a refund if they paid too much tax because too much was withheld in the previous year.

For many families, that money can be a lot of money.

Almost three-quarters of filers received a tax refund in 2023, and the average payment was worth about $3,176, down about 3% from the previous year.

Some tax experts say the 2024 refund could be even larger, with some people potentially receiving up to 10% more than last year.

The IRS warned taxpayers that the average refund amount could change in the coming months. Vitaly Vodratsky – Stock.adobe.com

That would increase the price by about $300 to $400.

“People whose incomes haven’t outpaced inflation should do better,” Mark Steber, chief tax intelligence officer at Jackson Hewitt, told FOX Business. “It’s not even voodoo or marketing twists, it’s pretty much just science.”

The increased refund amount is a ray of hope in the inflation crisis that destroyed millions of households’ finances last year.

Three-quarters of filers received a tax refund in 2023. NINENII – Stock.adobe.com

This is because the IRS adjusts the federal income tax bracket and standard deduction annually. In times of painfully high inflation, tax increases are larger and have a greater impact on taxpayers.

Taxes will rise by about 7.1% in 2023, a historic increase and even higher than the 5.5% median income workers received last year.

Most taxpayers have until Monday, April 15th to file their returns or request an extension.

The IRS expects to receive more than 128.7 million individual tax returns by this year’s deadline.

The IRS tells filers that to receive a refund within 21 days of filing, they must electronically file their return, verify it is accurate and complete, and apply to receive their refund by direct deposit. I warned you.

However, tax collection authorities say some returns may require “additional review” if the system identifies errors or if there is a mistake on the return or there is suspicion of theft or fraud. warned that processing may take some time.

Eric Bronnekant, head of tax at online financial advisor Betterment, previously said, “Once you’re relatively certain that you have all your tax documents in place, you can file as soon as possible and start investing your money.” Please,” he previously told FOX Business. “Generally, the IRS doesn’t pay interest on refunds. So it’s certainly better to get that money sooner.”

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