Experts warn against anxiety as IRS discloses large fall in average tax refunds.
Average Tax Refund. (PHOTO: Detroit Free Press)
Taxpayers Advised to Stay Calm Amidst Sharp Drop in Average Tax Refunds
Early IRS numbers show an almost 29% drop in the average tax refund compared to last year worrying taxpayers according to Market Watch. Due to the delayed start of the filing season the IRS is processing fewer returns than previous year. Refunds for the earned-income tax credit and the refundable element of the child tax credit are kept until February 15 to avoid fraud further affecting averages. Taxpayers should be calm as more returns are likely to be completed in the coming weeks and increasing the average tax refund amount. Tax experts also note that life changes and tax legislation changes can considerably affect average tax refund amounts. Experts expect average tax refund to match past years in 2023 due to no substantial federal-law changes and tax credit increases may offset early fears.
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Analysts predict a 5-10% refund increase as tax season progresses, encouraging taxpayers to assess their situations amid inflation adjustments.
In addition, inflation changes to the tax code may lower tax bills and increase refunds for taxpayers whose incomes didn’t keep pace with inflation. After these modifications analysts expect typical refunds to rise by 5% to 10% as tax season proceeds and more returns are completed. After the first shock of smaller average refunds, people should analyze the bigger picture and their unique circumstances before making tax decisions this year.
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