A recent survey of taxpayers shows a large number of Americans anticipated a tax refund that is either the same size or larger than last year’s.
The survey, released by tax-preparing software firm TaxAct this month, showed that only about 30 percent of Americans anticipated “receiving less of a refund on their 2022 returns” despite recent warnings from the Internal Revenue Service and other tax experts. Another 24 percent said in the survey that they “don’t know what to expect.”
The smaller refunds come as many Americans are saving less and are increasingly expressing worry about decades-high inflation, according to a TaxAct release. Tax experts have said that federal government pandemic programs as well as tax credits have ended for many.
“Refunds are predicted to go down 11 percent from last year,” Curtis Campbell, president and CEO of TaxAct, stated in a press release. “And it’s important for people to be prepared to receive less or even owe money this tax season.”
Citing recent changes to the tax code, he noted that “we can expect to see lower tax refunds across the board this season being there was no stimulus relief this past year and other tax advantages, like the Child Tax Credit, reverted back to their lesser 2019 values.”
“There is a lot of economic uncertainty right now, and for the majority of customers we serve, their tax refund is their biggest paycheck of the year,” Campbell added. “U.S. citizens are saving less money, and therefore, relying on their refunds to help make ends meet.”
Data released by the IRS earlier this month show that tax refunds are 11 percent smaller, on average, than the same time a year ago. Still, the IRS has sent out more tax refunds this year than last year, while a greater number of processed returns triggered a refund so far with less than a month to go before the April 18 tax-filing deadline.
The average tax refund amounted to $3,028 as of Mar. 3, down from $3,401 during the same time period in 2022. So far, the IRS has sent out 42 million refunds this year, compared with some 38 million that were sent during the same time period last year.
“With the loss of the Child Tax Credit and Earned Income Tax Credit expansions, families and individuals are receiving smaller refunds this tax season,” Joanna Ain, of nonprofit Prosperity Now, told Yahoo News earlier this month. “On average, a household pays $220 per tax return in order to file. In addition, low-income households often end up paying more for filing taxes due to the charges applied to the extra forms needed to claim tax credits.”
TaxAct’s survey also found that Americans are “overwhelmingly concerned” about high inflation and cited it “as their biggest concern for both 2022 and 2023,” the release said. More than 50 percent rank inflation as their top financial worry, while this “fear was strongest in 2023 for consumers with dependents and consumers who identified as White or Hispanic/Latino.”
The IRS itself issued a similar message late last year about smaller returns. It also warned that it may take longer to process some tax returns.
“Refunds may be smaller in 2023,” the IRS warned last November. “Taxpayers will not receive an additional stimulus payment with a 2023 tax refund because there were no Economic Impact Payments for 2022. In addition, taxpayers who don’t itemize and take the standard deduction won’t be able to deduct their charitable contributions.”
As part of the federal government’s pandemic rulemaking, the child tax credit was expanded from $2,000 per child to $3,600 for each child under the age of 6 and to $3,000 for children between the ages of 6 and 17. Meanwhile, a change to the above-the-line charitable deduction and the expiration of the mortgage insurance premium deduction could also lead to smaller refunds for many Americans.