Lower Tax Refunds This Year: What You Need to Know
The 2024 tax filing season has brought some unexpected news for American taxpayers. According to recent data from the Internal Revenue Service (IRS), the average tax refund this year is 32.4% lower compared to the same period last year. As of February 14, the average refund stands at $2,169, down from $3,207 in 2023. This significant drop has left many taxpayers wondering if they’re getting less money back than usual. However, the IRS has stepped in to provide some clarity and reassurance. They’ve emphasized that tax filing numbers often even out as more returns are processed, and this year’s lower figures may simply reflect the fact that fewer returns have been filed so far. With the filing deadline set for April 15, there’s still plenty of time for the numbers to shift. Additionally, this year’s data doesn’t yet include refunds related to the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit, which are typically issued later in the season. These credits can significantly boost average refund amounts, so taxpayers shouldn’t panic just yet.
Understanding the IRS Data: Why Refunds Are Lower Right Now
The IRS has addressed the confusion surrounding the lower-than-expected refunds, explaining that the current data doesn’t include returns claiming credits like the EITC or Additional Child Tax Credit. These credits are processed later due to additional identity verification requirements under the Protecting Americans from Tax Hikes Act (PATH Act). As a result, these refunds often don’t reach bank accounts until mid-February or even early March. Last year’s data for the same period included these credits, which can create a misleading comparison. The IRS has also pointed out that tax season trends can vary from year to year, and delays are not uncommon. Factors like federal holidays and weekends can slow down processing times, but most refunds are still issued within 21 days for those who file electronically and use direct deposit. While the lower average refund might seem alarming, it’s important to remember that the season is still unfolding.
Tips for a Smoother Tax Filing Experience
Tax season can be a stressful time, but being prepared and informed can make the process much easier. The U.S. Sun has been covering the 2024 tax season, offering valuable insights and tips to help taxpayers navigate the challenges. For instance, the IRS provides a helpful online tool called “Where’s My Refund?” that allows taxpayers to track the status of their refund within 24 hours of e-filing. For those who file paper returns, the tool becomes available within four weeks. However, some trends on social media, like a popular TikTok trick encouraging taxpayers to withhold certain items on their returns, have been flagged as misleading. Tax experts warn that while these claims may have some basis in reality, they’re often exaggerated or misapplied, which could lead to unnecessary complications. It’s always best to stick to tried-and-true strategies for maximizing your refund and avoiding delays.
Expert Advice: How to Maximize Your Refund
Tax experts agree that there are several steps you can take to ensure you get the most out of your tax return. One of the most important things is to avoid leaving money on the table by overlooking eligible credits and deductions. According to some experts, taxpayers may be missing out on up to $5,000 by failing to plan properly. For example, self-employed individuals and business owners can claim deductions for home office expenses, business mileage, and internet costs, provided they have detailed records to support these claims. Tax credits, such as the EITC or Child Tax Credit, are particularly valuable because they provide dollar-for-dollar reductions in taxes owed, unlike deductions, which only lower taxable income. Choosing the right filing status is another crucial factor, as it can significantly impact your tax liability. Tax expert Karla Dennis notes that credits are “always better than deductions” because they directly reduce the amount of taxes you owe.
Getting Your Refund Faster: Strategies to Avoid Delays
If you’re eager to get your refund as quickly as possible, filing electronically and using direct deposit is the way to go. TurboTax expert Lisa Greene-Lewis suggests that filing early can also help speed up the process, as the IRS begins processing returns as soon as they’re received. The average refund may be lower this year, but Greene-Lewis points out that it’s still close to $3,000 for many taxpayers. Additionally, avoiding common pitfalls, such as incorrect or incomplete information on your return, can help prevent delays. If you’re eligible for credits like the EITC or Additional Child Tax Credit, keep in mind that these refunds are subject to additional processing times due to required identity checks. The IRS estimates that these refunds may not arrive until March 3 at the earliest. While it’s tempting to track your refund obsessively, remember that occasional delays are a normal part of the process.
Final Thoughts: Staying Calm and Prepared
While the lower average refund this year may have caused some concern, it’s important to remember that tax season is a dynamic process. The IRS has assured taxpayers that the numbers will likely balance out as more returns are filed and processed. If you’re unsure about your refund or eligibility for certain credits, tools like “Where’s My Refund?” can provide valuable insights. For those affected by natural disasters, such as the Los Angeles fires, the IRS has extended the filing deadline to October 15, offering some much-needed relief. In the meantime, staying informed and seeking advice from tax professionals can help you navigate the complexities of tax filing. By avoiding common mistakes, taking advantage of available credits and deductions, and staying patient, you can ensure a smoother and more successful tax season. Remember, every year is different, and with the right preparation, you can make the most of your return.
