Tax Refunds Disappointing Many in Early 2024

Due to the increasing volume of returns being processed, the IRS has cautioned taxpayers that the average refund amount will likely change in the coming months. However, early data published by the IRS indicates that tax refunds this year have been smaller than last year.

Smaller Refunds

According to the IRS, so far this year the average refund check has been $1,395, which is almost a whopping 30% lower than the $1,963 average last year. Approximately $3.65 billion worth of tax refunds were collected from nearly 2.6 million individuals.

For millions of Americans who rely on their tax refunds to make major purchases, save for retirement or pay off debt, the decline in refund size is concerning. The cost of basic needs like food and housing have also risen as a result of high inflation, which is still hitting millions of taxpayers.

To combat inflation, the IRS annually adjusts the federal income tax brackets and standard deductions. It is more difficult for taxpayers to deal with increases in times of painfully high inflation.

Overpaid taxpayers will generally receive a refund if too much money was withheld. A substantial amount of money can be saved by many families. An average refund of $3,176 was received by three-quarters of filers in 2023, a decrease of about 3% from last year.

Those expecting to receive the earned income tax credit, a tax break for low- to moderate-income workers, or the child tax credit cannot legally receive their refund until mid-February.

Slower Processing

Once you prepare and file your return, you can expect delays as well. Path Act and ID Verification are significantly impacting IRS processing the actual refunds.

It is anticipated that the IRS will receive more than 128.7 million individual tax returns this year. The IRS has warned filers that electronic returns must be filed within 21 days of filing, that accurate and complete returns must be filed, and that direct deposits must be requested.

The deadline for filing returns or requesting an extension is Monday, April 15.

Sources

“2024 IRS TAX REFUND UPDATE – New Refunds Released, Path Act, ID Verification Delays, Transcripts” – UI Vlogs 2021

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