The Internal Revenue Service (IRS) has sent lower tax refunds to taxpayers so far this filing season, with the agency blaming the situation on the delayed start of the season.
According to statistics released by the IRS on Friday, the federal income tax refund for the 2024 filing season averaged $1,395 as of Feb. 2. This is almost 29 percent less than the refunds for the 2023 filing season. The IRS claims the decrease is because last year’s filing season kicked off on Jan. 23, while this time around, it started seven days later on Jan. 29.
“Considering the loss of 7 days in this comparison, filing season statistics … show a strong start to filing season 2024, with all systems running well,” the agency said. Refunds via direct deposits have declined by a quarter from $2,056 to $1,543.
In total, the IRS has dispatched $3.64 billion in refunds this season, which is over 76 percent less than the $15.69 billion refunded last year. Other metrics like the total number of tax returns received, returns processed, and the number of refunds are, so far, lower in 2024.
According to a recent update, this season’s EITC and ACTC refunds are slated to be issued by Feb. 17 to early filers of the credits.
Higher Tax RefundsWhile refund checks have been lower so far, some experts predict that people will see bigger refunds this year. In an interview with CBS, Mark Steber, chief tax information officer at Jackson Hewitt, said he is expecting refunds of some taxpayers to rise by double digits in the 2024 filing season than last year.
Elevated inflation forced the IRS to adjust many of its provisions in 2023, which pushed up standard deductions to a higher level and raised the tax brackets by 7.1 percent.
“Say your income didn’t keep pace with inflation—you made the same as the prior year but didn’t increase your income by that inflation rate of 7 percent or so—you could see a better refund.”
Modeling last year’s refund data and the inflation adjustments made by the IRS, Mr. Steber calculates up to 10 percent more refunds for such people. Last year, the earnings of a median worker rose by 5.5 percent, less than the IRS’ 7.1 percent inflation adjustments.
“A lot of people didn’t keep pace with inflation,” he said while adding that Americans in the middle and lower income groups are more likely to benefit from higher refunds.
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 cut down their debts.
Filing as a widower rather than single allows the person to claim double the standard deduction. Such larger deductions can contribute to higher tax refunds.
Taxpayers who have made energy-efficient upgrades to their home, like installing new exterior doors, windows, or insulation, can claim tax credits under provisions of the Inflation Reduction Act.
Getting RefundsAccording to the agency, taxpayers who have e-filed their returns typically see their refund status after about 48 hours through an IRS webpage. The IRS usually takes up to 21 days to process refunds for e-filers.
In case the returns were filed by mail, refunds could take four weeks or more. If there are corrections, refunds will take longer.
The IRS offers multiple ways to get refunds—paper checks, U.S. savings bonds, mobile payment apps, and prepaid debit cards. However, a direct deposit “is the fastest way to get your refund.” Taxpayers who opt for this will get refunds in their checking, savings, or retirement accounts.
In case a taxpayer did not receive the refund they expected, it could be because there were some errors in their returns. Taxpayers will receive notifications in such situations explaining the changes made.