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Friday, February 23, 2024
HomeFinance NewsIRS Reports 29% Lower Average Tax Refund This Season

IRS Reports 29% Lower Average Tax Refund This Season

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The IRS reported that as of Feb. 2, they have already issued 2.6 million refunds, totaling about $3.65 billion. The average refund this year is approximately $1,395, which is a significant decrease of about 29% compared to the previous year. This year’s filing season statistics are only based on five days of data, compared to 12 days of data from the previous year, according to the IRS. The initial statistics indicate a strong start to the 2024 filing season. However, some early filers such as earned income tax credit recipients and child tax credit recipients, who generally file early, have not yet filed. By law, filers claiming the refundable portion of the child tax credit or earned income tax credit will not receive refunds until Feb. 27 at the earliest.

Mark Steber, chief tax information officer at Jackson Hewitt, cautioned against reading too much into the data based on the first five days of the filing season. He pointed out that the data are very preliminary and that it is too early to make assumptions about the entire year’s tax season based on limited information. Only five days of data is a small sample, and a lot could change as the filing season progresses. The IRS also noted that pending tax legislation in Congress could provide a retroactive boost for the child tax credit for 2023, potentially leading to an increase in refunds for eligible filers. Despite the uncertainty, the IRS is encouraging taxpayers not to wait on Congress and to file when they are ready.

“We fully expect refunds to be healthy,” Steber declared, attributing the potential for higher refunds to higher inflation. Workers who overpaid taxes throughout the year can generally expect a refund, while those who didn’t pay enough may owe money. The higher refunds may also reflect IRS inflation adjustments, including higher federal tax brackets and standard deductions, among other factors.

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