FINANCIAL NEWS
IRS tax refunds: what are the reasons why your refund may be less than 2022?
People have begun to receive their first tax refunds though the average refund received it more than 10% lower than last year.
American taxpayers who filed their 2022 tax returns as soon as the filing period opened at the end of Janauary will be receiving their refunds. However, many of them are smaller than the refunds seen during the 2021 filing season.
The average refund for the 2021 season was, at this stage, $2,201 while so far for the 2022 season it is $1,963, a 10.8% decrease. Nearly 8 million people have received a refund, more than twice the amount of mid-February at the same time last year. The total amount of money refunded at this point has increased by about two-thirds, from $9.5 billion last year to nearly $16 billion this year.
At the end of the filing season last year the average return was $3,039, a 7.5% increase on a year prior. Based on the current data, don’t expect this year’s average to get near.
The amount of your refund for 2023 will depend on whether you took advantage of the prior tax benefits during 2022, since each taxpayer’s situation is different.
The IRS acknowledged that tax refunds were to be smaller this year.
Why will refunds be lower than the previous year?
Refunds are likely to be smaller than those sent in 2020 and 2021 because many of the pandemic relief programs have ended, including the increased Child Tax Credit, stimulus checks, and expanded unemployment benefits. None of these tax benefits will be available when you file your 2022 return, which explains why you will likely see a decrease in the size of your refund.
“Due to tax law changes such as the elimination of the Advance Child Tax Credit and no Recovery Rebate Credit this year to claim pandemic-related stimulus payments, many taxpayers may find their refunds somewhat lower this year,” the IRS said in a news release.