Will Your IRS Refund Be Less This Year? | Kiplinger
Tax season is upon us, and recent IRS data has sparked some concern. The average tax refund for this year stands at $1,395, a significant drop from the $1,963 average seen last year. This news might worry the 75% of taxpayers who typically receive refunds. However, before panicking, let’s delve into what’s causing this shift and what it means for you.
The IRS data shows that tax returns processed this year are about 17% lower compared to the same period last year. This discrepancy could be due to the delayed start of the tax season and taxpayers waiting to file due to potential changes in child tax credit legislation. Despite this, there’s a silver lining: the average refund amount has increased to $1,741, with potential further increases expected as the tax season progresses, especially for those eligible for the earned income tax credit (EITC).
Why the drop in refunds? Various factors can contribute. Life changes such as having more dependents or higher income can affect refund amounts. Turning 17 or 19 (or 24 if a full-time student) can change eligibility for certain credits, while starting a side gig without sufficient tax payments can lead to a higher bill. Retirees collecting Social Security benefits alongside other income may face increased taxes on their benefits.
Looking to maximize your refund? While you can’t alter past events, there are steps you can take. Contributing to your HSA or IRA before the deadline can help. Some might benefit from itemizing deductions rather than taking the standard deduction. It’s crucial to consult with a tax professional to navigate these complexities and ensure you’re taking advantage of all available tax breaks…………
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Rising Dough
How do changes in tax refund amounts affect consumer spending patterns, and what role do these patterns play in shaping the economy?
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