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Average tax refund is almost 29% lower this tax season, IRS reports

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With tax season in full swing, the IRS has issued more than 2.6 million refunds, worth about $3.65 billion, as of Feb. 2, the agency reported last week.

So far, the average refund is $1,395, compared to $1,963 a year ago, which is about 29% lower.

However, since the 2024 tax season began on Jan. 29, the average refund is only based on five days, compared to 12 days a year ago, the IRS noted Friday, saying early statistics suggest a “strong start to the tax filing season.” 2024.”

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“It's really very preliminary data,” said Mark Steber, director of tax information at Jackson Hewitt. “I caution anyone not to read too much into an entire year, or a three-and-a-half-month tax season, with five days of data.”

Last year, the average refund for the 2023 filing season was $3,167, as of Dec. 29, according to the IRS.

Many people who normally file their returns early, such as earned income tax recipients and child tax credit recipients, have not yet done so, Steber said.

By law, taxpayers who claim the refundable portion of the child tax credit or the earned income tax credit will not receive refunds until February 27 at the earliest, the IRS says.

Why some tax refunds could be larger

You can usually expect a refund when you overpay taxes throughout the year. Many workers automatically send money through withholding from their paycheck. By comparison, you may owe money if you didn't pay enough last year.

“We're still seeing higher refunds,” Steber said, in part because of higher inflation.

If your income didn't keep up with inflation in 2023, you could see a larger refund this season due to IRS inflation adjustments, he said, such as higher federal tax brackets, the standard deduction and more.

“We expect reimbursements to be healthy,” Steber added.

'Don't wait for Congress' to apply

There is tax legislation pending in Congress that could provide a retroactive boost to the child tax credit for 2023, which could increase refunds for certain eligible taxpayers.

But if taxpayers are willing to file, they shouldn't wait, according to the IRS.

“We urge and encourage taxpayers to file their returns when they are ready,” IRS Commissioner Danny Werfel told reporters in January during a news conference. “Don't wait for Congress.”

However, nearly half of taxpayers do not plan to file until March or later, citing complexity and stress as the main reasons for the delay, according to a January survey by IPX1031, an investment property sharing service. .

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