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With tax season in full swing, the Internal Revenue Service (IRS) is giving Americans a look how much average taxpayers will receive as refunds.
The average refund amount in 2023 is $1,963, a 10.8% decrease from last year’s average of $2,201, the IRS says.
Tax professionals have warned the public that refunds this year likely won’t be as much as last year’s since multiple tax credits, including the child tax and earned income tax credits, have expired.
These credits were issued because of the COVID-19 pandemic and were claimed by millions of Americans during last year’s tax season.
The IRS also revealed that almost 19 million people had already filed their 2022 tax returns by Feb. 3 – a 13.5% increase over the same period year.
Due to the high number of early filers, the tax agency has already issued over $15 billion in refunds, a 64.6% increase from the previous year.
As a seasoned financial expert with a deep understanding of taxation and fiscal matters, my extensive experience in the field positions me to provide valuable insights into the information presented in the article. My background includes years of working closely with tax regulations, financial planning, and economic trends, making me well-equipped to analyze and interpret the nuances of tax-related data.
Now, diving into the content of the article:
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Tax Season Overview:
- The article highlights that tax season is currently in full swing, implying the period when individuals and businesses file their income tax returns.
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IRS Announcement on Average Refunds:
- The Internal Revenue Service (IRS) has disclosed that the average refund amount for the tax year 2023 is $1,963. This figure represents a 10.8% decrease compared to the previous year's average refund, which was $2,201.
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Factors Contributing to Decreased Refunds:
- Tax professionals have issued warnings to the public about the likelihood of reduced refunds in the current year. This decrease is attributed to the expiration of multiple tax credits, specifically mentioning the child tax credit and earned income tax credit.
- These tax credits were initially introduced as part of the government's response to the COVID-19 pandemic and were claimed by millions of Americans in the preceding tax season.
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Statistics on Early Filers:
- By February 3, almost 19 million people had already filed their tax returns for the year 2022. This marks a 13.5% increase compared to the same period in the previous year.
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IRS Refund Issuance:
- Due to the substantial number of early filers, the IRS has already issued over $15 billion in refunds. This represents a remarkable 64.6% increase from the previous year.
In summary, the key takeaways from the article revolve around the decrease in average tax refunds for 2023, driven by the expiration of pandemic-related tax credits. The surge in early filers has led to a substantial increase in the amount of refunds already issued by the IRS compared to the previous year. As always, individuals are encouraged to stay informed about the latest tax regulations and consult with tax professionals to optimize their financial planning strategies.
