With the 2024 tax season well underway, the IRS is providing an early peek at the typical refund amount taxpayers can expect to receive.
The IRS said this week that it has issued about 20 million refunds as of Feb. 16, worth a collective $66.9 billion. The average refund check so far this year is worth $3,207 – about 2.1% higher compared with the same time last year.
That is in line with an earlier prediction from some tax experts, who said that refunds could end up being much bigger in 2024, with some people receiving up to 10% more than they did last year. That would amount to a roughly $300 to $400 increase.
"For anybody whose income did not outpace inflation, they should do better," Mark Steber, chief tax information officer at Jackson Hewitt, previously told FOX Business. "It's not even voodoo or marketing spin, it's pretty much just science."
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Taxpayers typically receive a refund if they had too much money withheld and overpaid their taxes the previous year. For many families, the money can be substantial. Nearly three-quarters of filers received a tax refund in 2023, with an average payment worth about $3,176, down about 3% from the previous year.
A bigger refund can be a relief to millions of Americans who depend on the influx of money from Uncle Sam to make major purchases, save for retirement or pay off debt. On top of that, many taxpayers are still struggling with high inflation, which has sent the cost of staples like food and rent soaring higher.
The bigger refunds are a silver lining of the inflation crisis that ravaged millions of households' finances last year.
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That's because the IRS annually adjusts the federal income tax bracket and standard deduction. In times of painfully high inflation, the increases are more significant and impactful for taxpayers. In 2023, the tax brackets shifted higher by about 7.1%, a historic increase that is also higher than the 5.5% earnings increase received by the median worker last year.
Most taxpayers will have until April 15 to submit their returns or request an extension.
The IRS expects to receive more than 128.7 million individual tax returns by this year's deadline.
To receive a refund within 21 days of filing, the IRS has cautioned filers they must submit returns electronically, ensure that they are accurate and complete, and request to receive the refund via direct deposit.
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However, the tax collection agency warned some returns may require "additional review" and take longer to process if their systems identify any errors, if there are mistakes on the return, or if it suspects theft or fraud.
"Once you're relatively certain that you have all of your tax documents, file as soon as you can so that you can start investing your money," Eric Bronnenkant, head of tax at online financial adviser Betterment, previously told FOX Business. "Because, in general, the IRS doesn't pay you interest on your refunds. So, getting that money in your hands sooner is better, for sure."
