For some, June means summer vacations, backyard barbecues, weddings, graduations, and the NBA Finals.

For many, taxes are probably among the last things they want to think about right now.

Unfortunately, the IRS doesn't take the summer off.

While the April 15 tax filing deadline has come and gone, there are important IRS deadlines to keep on your radar this month. If you're still waiting for a tax refund, there are a few developments worth noting.

Here's more about key IRS deadlines for June, refund processing, and some common summer activities that could affect next year's tax bill

June 15 estimated taxes

The second estimated tax payment for the 2026 tax year is due June 15, 2026.

The U.S. tax system operates on a pay-as-you-go basis, meaning taxpayers are generally expected to pay taxes throughout the year as income is earned. While traditional employees typically have taxes withheld from each paycheck, that isn't always the case for other types of income.

Estimated tax payments are commonly required for:

• Self-employed workers
• Freelancers and independent contractors
• Gig workers
• Small business owners
• Investors with significant dividend, interest, or capital gains income
• Landlords receiving rental income
• Some retirees who don't have enough tax withheld from their retirement income

Failing to pay enough tax during the year can result in IRS underpayment penalties, even if you ultimately pay your full tax bill when you file your return.

Taxpayers can use Form 1040-ES to estimate how much they should pay. After the June payment, the remaining estimated tax deadlines for 2026 are September 15, 2026, and January 15, 2027.

For more information, see our report: When Are Estimated Tax Payments Due?

June 15 filing deadline for Americans living abroad

June 15 is also an important date for U.S. citizens and resident aliens whose tax home and abode are outside the United States and Puerto Rico.

These taxpayers receive an automatic two-month extension beyond the standard April filing deadline. As a result, many expats have until June 15, 2026, to file their 2025 federal income tax returns.

It's important to remember that an extension applies to filing your return, not to paying your taxes. (That payment was due in April.) Interest generally begins accruing on unpaid balances after the regular April tax deadline.

Keep in mind:

• Many Americans living overseas might qualify for tax benefits, such as the Foreign Earned Income Exclusion or the Foreign Tax Credit, but they generally must file a U.S. tax return to claim them.
• Taxpayers who need additional time can typically request an extension until October by filing IRS Form 4868.

IRS refund status: Why some taxpayers might receive refunds in June

The IRS continues to issue refunds throughout the summer, and many taxpayers who filed later in the season might still be receiving their refunds in June.

• For most taxpayers who file electronically and choose direct deposit, refunds are generally issued within about 21 days.
• However, not every return moves through the system that quickly, particularly if additional review or corrections are required.

One issue affecting some taxpayers this year involves IRS Notice CP53E.

As Kiplinger has reported, this notice is generally issued when a direct deposit is rejected, most often due to incorrect or mismatched bank account information or a financial institution declining the deposit. When that happens, the IRS typically eventually issues the refund as a paper check.

While taxpayers still receive their money, the switch from electronic payments to mailed checks can add processing time and create delays that many weren't expecting. The CP53E letters, which have reportedly been sent to millions of taxpayers this year following the tax agency's move to phase out paper refund checks, have caused confusion.

If you're still waiting on a refund, the IRS recommends checking the "Where's My Refund?" tool on IRS.gov or logging directly into your official IRS online account.

For more information, see our IRS tax refund calendar for 2026.

Summer activities that could affect your next tax bill

Even if you've already filed your taxes this year, several common summer activities can affect the return you'll file next year, in early 2027.

Some common summer events that can affect taxes include:

Starting a summer job

Students and seasonal workers often take on summer employment. Keep in mind that even part-time work can affect tax withholding and potentially create a tax filing requirement.

Taking on gig work or a side hustle

Driving for a rideshare company, freelancing, selling products online or earning income through an app (a few examples) can create taxable income that isn't subject to tax withholding. That might mean estimated tax payments are necessary for some to avoid penalties later.

Getting married

Summer remains one of the most popular wedding seasons in the U.S. Marriage can affect filing status, tax brackets, deductions, credits and withholding. Newlyweds might want to review their Form W-4s to ensure enough tax is being withheld from their paychecks.

Welcoming a child

Having a baby or adopting a child might make taxpayers eligible for valuable tax benefits, including the Child Tax Credit and other family-related tax breaks.

Buying or selling a home

A home purchase can affect deductions and tax planning, while a home sale could potentially trigger capital gains considerations depending on the circumstances.

Changes in retirement income

Some retirees begin taking required minimum distributions (RMDs) during the year or adjust withholding on Social Security and retirement plans. Those changes can affect overall tax liability.

June tax concerns: Bottom line

The IRS is reminding taxpayers to review their withholding and tax situation whenever major life or income changes occur.

But keep in mind that midyear is a good time not only to review your potential tax liability and make adjustments that might lower your next tax bill, but also to take a holistic look at your finances.

Overall? Everyone's tax and financial situation is different. If you have any concerns about whether the June tax deadlines affect you, it's best to consult with a tax professional or certified financial planner who can provide tailored advice and guidance.

Read More

• Federal Income Tax Brackets and Rates for 2026
• NBA Finals Put the Jock Tax in the Spotlight
• IRS CP53E Letters Could Change Due to Taxpayer Backlash

The IRS may revise its CP53E notices after months of taxpayer backlash and practitioner complaints.

During a recent meeting with tax practitioners, the IRS Chief of Taxpayer Services said the agency may consider changes to the notices in light of widespread confusion, according to nonprofit publication Tax Notes (paywall).

As Kiplinger has reported, hundreds of thousands of CP53E notices tied to direct deposit verification have reportedly been sent, and by some estimates, several million. In either case, those numbers represent a significant share of taxpayers hearing from the IRS during filing season.

The notices are part of the tax agency's broader effort to shift more refunds to electronic direct deposit and phase out paper checks — a modernization push designed to improve efficiency and lower fraud risk.

But the rollout has become somewhat controversial, as many recipients believed the letters were scams or sent with nefarious intent.

The stakes aren't trivial. Average federal tax refunds for the 2026 filing season hovered just above the mid-$3,000s, and surveys show that most taxpayers planned to use their refunds to cover essentials and pay down debt. So delays can tie up household cash flow.

What IRS notice CP53E means

The CP53E notice is generally issued when the IRS cannot process a refund via direct deposit because:

• Bank account information is missing or incorrect
• Financial institution details were rejected
• Post-filing adjustments result in a refund being issued after changes to a return

Taxpayers are typically instructed to log in to their IRS online account within 30 days to update their banking information. If they don't respond, the IRS says it will issue a paper check. Though that can add roughly 6 weeks to the processing time, depending on timing and agency workload.

Does the IRS use QR codes?

Some tax professionals and taxpayers reported receiving CP53E letters in situations where:

• Refunds had already been received
• No refund was expected
• Taxpayers actually owed money to the IRS

On practitioner forums and social media platforms, some described situations in which CP53E notices reportedly appeared before other notices related to IRS tax return adjustments that would have explained an unexpected refund.

The format of the notices added to the confusion, as some taxpayers reported being unsure about the validity of QR codes and instructions directing them to log in to their IRS online accounts.

Those CP53E scam fears stood out, since IRS impersonation scams have become increasingly common.

Adding to the confusion? The toll-free phone number listed in the notice contains recorded explanations regarding the notice and doesn't connect taxpayers to a live customer service agent at the IRS.

ID.me access concerns

The CP53E notice seems to have also revived criticism of the IRS’s online account system and its reliance on ID.me identity verification.

On social media, some taxpayers said they felt pressured to create online IRS accounts or complete third-party identity verification to resolve refund issues within tight response windows.

One Reddit user described waiting for ID.me verification while the 30-day response deadline ticked down, writing that “having a 3rd party stand between me and my refund feels silly.”

Another practitioner told Kiplinger that she and several of her clients received the CP53E notices, and that some of those clients owed taxes, leading her to believe the IRS might be trying to prompt taxpayers to sign up for IRS online accounts.

The IRS hasn't said the notices were intended to increase adoption of online accounts or ID.me, but updated FAQ materials direct users experiencing access issues toward identity verification support resources.

IRS updates CP53E FAQs due to confusion

Worth noting: the IRS updated its FAQ guidance on CP53E notices.

The agency clarified that the letters are legitimate IRS correspondence and that QR codes included in the notices are intended to direct taxpayers to official IRS online account services, not third-party websites.

The guidance also walks taxpayers through how to confirm a notice’s authenticity by logging directly into IRS.gov rather than using embedded links or scanning codes. The tax agency reiterates that taxpayers will never be asked to provide sensitive information through QR codes or unsolicited text links.

The Taxpayer Advocate Service (TAS) issued separate guidance reinforcing that CP53E notices should be verified on IRS.gov or through official IRS accounts, and that taxpayers who believe they received a notice in error can cross-check their refund status directly using IRS tools before taking action.

TAS also emphasized basic scam-avoidance, including not clicking unfamiliar QR codes or links from unconfirmed notices.

Getting an IRS letter: What happens next

No formal redesign of the notice has been announced yet, so for now, the IRS says the safest approach is to verify your IRS status directly through your official IRS online account.

And remember: Every taxpayer's situation is different, so if you need professional advice on how to respond to a CP53E or other IRS notice, it's a good idea to consult a tax professional.

Overall, the situation highlights a significant challenge for the IRS: modernizing a system that processes hundreds of millions of tax returns and billions of dollars in refunds each year while maintaining trust in its communications with millions of taxpayers.

Related

• Received an IRS Letter? CP53E Notices Spark Confusion and Scam Fears
• IRS Tax Refund Calendar 2026: When Will Your Payment Arrive
• The Government is Phasing Out Paper Checks: What to Know
• Trump No-Audit Deal: Will You Still Get Audited by the IRS?

As part of a broader push to modernize payments, the IRS has been phasing out paper refund checks. This tax season, that shift has triggered a surge in notices asking taxpayers to confirm or update their banking information.

These letters, known as CP53E notices, are landing in more than 1 million mailboxes, according to some congressional estimates.

Unfortunately, as you might expect, the spike in IRS correspondence could increase the chances of receiving a letter in error, per some social media reports, or create confusion over whether the notices are from fraudsters.

So, how do you know if your IRS refund letter is real? And what should you do if you get one? Here's more to know and some red flags to watch.

Related: IRS May Change Controversial CP53E Letters

Why CP53E IRS letters seem to be everywhere

Let's start with why what's happening is happening.

A CP53E notice from the IRS typically means the tax agency couldn’t deposit your tax refund as requested. That's often due to missing or mismatched bank account details.

But this year, volume is part of the story.

As Kiplinger has reported, the federal government, including the IRS, is phasing out paper checks and steering more payments toward direct deposit. As a result, hundreds of thousands of taxpayers are being prompted to review or fix their banking information.

So, in recent months, there has been a significant surge in the number of legitimate CP53E letters issued by the IRS.

• Congressional data indicate that 1.4 million CP53E notices have been issued as of March 2026, amid the direct deposit push.
• As mentioned, this volume stems from IRS efforts to reduce paper checks, which take longer to process (typically 6-8 weeks, compared with a few days for electronic payments).
• The Taxpayer Advocate Service reports that direct deposit issues affect roughly 5% of filers each year, but the shift to paper checks has affected the number of notices sent this year.

That increase comes amid reports that some people have received notices sent in error or have received the CP53E notice even though they owed the IRS taxes this year.

The whole situation is raising concerns among taxpayers. Some question the tax agency's motives for sending letters to those who shouldn't receive them, while others are unsure about the authenticity of communications they receive purporting to be from the IRS.

What is an IRS CP53E notice?

As mentioned, the IRS typically sends a CP53E notice when the agency can't deposit your tax refund due to missing, outdated, or mismatched bank details on file.

If your letter is legitimate, it usually indicates a processing issue with your refund — not a penalty or IRS audit.

In most cases:

• Your refund is temporarily on hold (usually approximately 21 days until you provide corrected information via your official IRS account).
• The IRS needs corrected or confirmed deposit details.
• You’ll have time to respond.

If you don't take action, the IRS may still eventually send a paper check. It just may take some time, likely about 6 weeks, according to the agency.

How to spot a fake IRS letter: Red flags to consider

Here are some things to look at closely if you receive a letter that you're not sure is real.

Be wary if the letter you receive asks for sensitive personal or banking information.

This might include your full Social Security number, bank login credentials, or detailed account information, or direct you to click a third-party link or scan an unfamiliar QR code. (Avoid scanning those codes in an unverified letter.)

You'll also want to be cautious if the letter's tone is urgent or threatening.

While legitimate IRS letters can be daunting, they usually should not rely on overly panic-driven language. And in the case of refund direct deposit notices, since you typically have roughly 30 days to respond, you will still likely receive a paper refund check if you don't. So, panic language could be a red flag.

Keep in mind: The IRS generally doesn't ask for sensitive data in unsolicited correspondence. Instead, a legitimate notice will typically direct you to log into your official IRS account via the official IRS website, not through a third-party or otherwise unfamiliar link.

Another thing to consider is whether the letter's details match your tax situation.

Some taxpayers have reported receiving notices about refunds they weren’t expecting or about returns for which they are not due a refund.

That kind of mismatch doesn’t always mean fraud is involved, but it’s a signal to pause and verify before acting.

How to verify your CP53E notice and respond

If you receive a CP53E notice, the safest course is to go directly to the IRS website by entering the official IRS URL in your browser. From there:

• Log in to your official IRS online account
• Check whether the notice appears
• You can also call the IRS using an official number

IRS refund status: Bottom line

According to IRS reporting, refunds run about 11% higher on average than last year. The average refund amount has hovered around $3,400, most likely due to changes in the Trump/GOP tax and spending bill enacted last year.

Recent polls suggest that many plan to use that money to pay down debt or cover essentials.

Overall? If a letter that looks like it's from the IRS asks you to share sensitive information, click on unfamiliar or third-party links, or act immediately, take a step back and verify it first.

And if your notice is legitimate and you need to track your tax refund after completing the direct deposit process, the IRS says to allow 2-5 days for your refund information to update online. From there, you can use the Where’s My Refund tool to check your refund status.

This article has been updated to mention taxpayers receiving letters even when they owe the IRS.

More on Tax Refunds

• IRS Refund Schedule 2026: When Will Your Money Arrive?
• 5 States Where Tax Refunds Could Be Later Than Usual
• Why Your IRS Refund Could Be Delayed or Frozen

Each week in our Ask the Editor series, Joy Taylor, The Kiplinger Tax Letter editor, answers questions on topics submitted by readers. This week, she's looking at four questions on tax refunds, how to get the IRS to abate a penalty and related topics. (Get a free issue of The Kiplinger Tax Letter or subscribe.)

1. Erroneous bank account information for tax refund

Question: I helped my granddaughter prepare her tax return and claim a refund. I filed her 2025 Form 1040 using the same bank account information shown on her 2024 Form 1040. However, I was unaware that my granddaughter had changed banks. How do I notify the IRS of her correct bank account information?

Joy Taylor: The best answer to your question comes directly from the IRS. The IRS has a web page that answers the question "what should I do if I entered an incorrect routing or account number for direct deposit of my refund?"

For example, if a taxpayer omits a digit in the account or routing number of an account and the number doesn't pass the IRS's validation check, then the IRS says it will send you a notice asking for more information. Note that if you catch the bank account error early enough, before the return has been posted to the IRS's system, then you can call the IRS on their 1-800 line and ask the agency to stop the direct deposit. Here is more information directly from the IRS on what you can do:

"Generally, if the financial institution recovers the funds and returns them to the IRS, the IRS will send you a notice providing the next steps."

"If you have contacted the financial institution and 5 calendar days have passed with no deposit, you will need to file IRS Form 3911, Taxpayer Statement Regarding Refund, to initiate a trace. This allows the IRS to contact the bank on your behalf to attempt recovery of your refund. Banks are allowed up to 90 days from the date of the initial trace input to respond to our request for information, but it may take up to 120 days for resolution."

"If funds aren't available or the bank refuses to return the funds, the IRS cannot compel the bank to do so. The case may then become a civil matter between you and the financial institution and/or the owner of the account into which the funds were deposited."

2. Refunds by paper check delayed

Question: I have a bank account, but I don't like using it for electronic payments or receipts. I filed my 2025 Form 1040, which claimed a refund. I didn't include my bank account information on the return because I want to receive my refund as a paper check. I got a letter from the IRS asking for my bank account information. What can I do if I still want a paper check?

Joy Taylor: The IRS is in the process of phasing out paper refund checks in accordance with President Trump's March 2025 executive order. Individuals who request paper refund checks when filing their Form 1040 are seeing their refunds delayed. The IRS is mailing letters to filers whose 1040s claim a refund but omit bank account details for direct deposit. These notices ask the filers to supply their bank account information within 30 days or say why they can’t. I am guessing this is the letter that you received from the IRS.

If you don't respond to the IRS notice, you will eventually get your refund check in the mail, but it will take time. According to the IRS, it will issue a paper check to nonresponders six weeks after the date it sent the original notice.

3. How the IRS calculates the underpayment penalty

Question: I am filing my 2025 Form 1040, and I know I am going to owe an underpayment penalty. How does the IRS calculate this penalty?

Joy Taylor: Generally, taxpayers will escape the underpayment penalty if they prepay, through estimated tax payments or withholding, at least 90% of their current-year total tax bill or 100% of what they owed for the prior year (110% if prior-year adjusted gross income exceeded $150,000). Taxpayers who owe an underpayment penalty use IRS Form 2210 to calculate the amount owed. I am aware that calculating the underpayment penalty can be confusing.

The IRS calculates the underpayment penalty based on the tax shown on your original return or on a more recent return that you filed on or before the due date. The tax shown on the return is your total tax minus your total refundable credits. The IRS calculates the penalty based on: (1) the amount of the underpayment, (2) the period when the underpayment was due and underpaid, and (3) the unpublished quarterly interest rates for underpayments.

Note that the IRS also charges interest on the underpayment penalties.

4. First-time penalty abatement

Question: For the first time ever, I am going to have to file my Form 1040 late. I know I will end up owing taxes when I file the return. Will the IRS be lenient in assessing penalties since I have always been tax-compliant?

Joy Taylor: You may be in luck. The IRS has a little-known first-time penalty abatement policy. It will approve a waiver of the late-filing and late-payment penalties for filers who pay or arrange to pay the tax due and have been tax-compliant for the past three years. The penalties for late payroll-tax deposits and delinquent returns of S corporations or partnerships are also eligible for the waiver if the conditions are satisfied. But the estimated-tax penalty (also called the underpayment penalty) doesn't qualify for this penalty abatement program.

You may have to request the waiver. If you get a notice from the IRS showing a late-payment or late-filing penalty due but not abated, follow the instructions in the letter or call the phone number on the notice. The IRS has said that it will begin to automatically provide first-time penalty abatement to taxpayers who qualify for relief, starting with 2025 tax returns filed this year. But I am not sure whether the IRS has yet implemented this automatic procedure.

About Ask the Editor, Tax Edition

Subscribers of The Kiplinger Tax Letter, The Kiplinger Letter and The Kiplinger Retirement Report can ask Joy questions about tax topics. You'll find full details of how to submit questions in each publication. Subscribe to The Kiplinger Tax Letter, The Kiplinger Letter or The Kiplinger Retirement Report.

We have already received many questions from readers on topics related to tax changes in the One Big Beautiful Bill, retirement accounts and more. We will continue to answer these in future Ask the Editor roundups. So keep those questions coming!

Not all questions submitted will be published, and some may be condensed and/or combined with other similar questions and answers, as required editorially. The answers provided by our editors and experts, in this Q&A series, are for general informational purposes only. While we take reasonable precautions to ensure we provide accurate answers to your questions, this information does not and is not intended to, constitute independent financial, legal, or tax advice. You should not act, or refrain from acting, based on any information provided in this feature. You should consult with a financial or tax advisor regarding any questions you may have in relation to the matters discussed in this article.

More Reader Questions Answered

• All Ask the Editor Q&As
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• Ask the Editor: Tax Questions on Roth IRA Conversions
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• Ask the Editor: Questions on Inherited IRAs

As Americans rush to meet the tax deadline this year, frustration about paying too much remains high, and in some ways, seems to be intensifying.

A March Fox News poll found that about 7 in 10 registered voters say their taxes are “too high,” up from roughly 6 in 10 last year. At the same time, a Pew Research Center survey found that about 60% of U.S. taxpayers are bothered "a lot" by the belief that wealthy people and corporations don’t pay their fair share.

Those numbers come as Tax Day 2026 wraps up and follow a sweeping tax overhaul last year when the 2025 tax law, pushed by President Donald Trump and congressional Republicans, was enacted.

Trump tax law 2025 changes and costs

Signed on July 4, 2025, the massive tax legislation known by some as the "big beautiful bill" extended Trump's prior 2017 tax cuts and added targeted breaks aimed at workers and retirees.

Among the most talked-about provisions:

• A deduction for tip income, capped at $25,000
• A deduction for overtime pay, capped at $12,500
• A new $6,000 “senior bonus” deduction
• A modest increase in the child tax credit to about $2,200
• A higher cap on state and local tax (SALT) deductions

But those tax cuts came with significant offsets — and long-term costs.

For example, the new law includes roughly $1 trillion in Medicaid cuts over the next decade and about $187 billion in SNAP (food assistance) reductions through 2034, according to policy estimates.

Analysts project the package will add significantly to the national debt over time, as lower tax revenues outweigh spending cuts.

Tax refund status vs. political promises

One way many Americans experience tax policy is through their IRS tax refunds, and here, the gap between messaging and reality is notable this year.

As Kiplinger reported, Republican lawmakers predicted and touted that the 2025 tax law could boost refunds by as much as $1,000. In reality, early data show that while average refunds are up by about (11%) that only amounts to an increase of roughly $300 to $350 from last year for many taxpayers.

And worth noting: most households are not treating that money as extra spending power.

Surveys show a majority of Americans say they plan to use their refunds to cover essentials like rent, groceries, utilities, and debt payments, rather than discretionary spending or savings.

Inflation rate right now

Another reason tax relief is being overshadowed: prices are rising again.

Recent inflation data shows monthly price increases accelerating again in early 2026 to 3.3% from 2.4%, with energy costs playing a leading role.

Gas prices have jumped sharply amid the Iran War conflict and resulting instability in the Middle East.

According to AAA, national gas averages are now roughly in the mid-$4 range per gallon. That's compared to significantly lower levels before the recent escalation in oil markets.

At the same time, even though the U.S. Supreme Court recently struck down many of Trump's tariffs, some economists note that tariffs imposed or expanded under the Trump administration have added upward pressure to imported goods — from electronics to clothing.

Which new tax breaks people actually like

Not all parts of the 2025 law are viewed equally. Some of the most popular provisions seem to be the most direct:

• Tax breaks on tip income
• Tax breaks on overtime pay

The $6,000 senior deduction has also seemed to draw support among retirees, though its impact varies depending on income level.

By contrast, more complex provisions — like the deduction for car loan interest — have reportedly not been claimed as much thus far on 2025 returns.

Another issue: Corporations not paying their 'fair share'

Beyond individual tax bills, data show that tax fairness remains a concern.

That perception is reinforced by corporate tax data. A 2026 report from the Institute on Taxation and Economic Policy (ITEP) found that at least 88 large, profitable U.S. corporations paid zero federal income tax in 2025. That's despite earning more than $105 billion in combined profits.

• The list includes major firms across sectors, like Tesla, 3M, Honeywell, Yum! Brands, and PayPal, along with several large airlines and consumer companies.
• The ITEP report highlights how widespread the use of deductions, credits, and loss offsets has become in reducing corporate tax liability.

Supporters of lower corporate tax rates say they incentivize investment and economic growth.

Critics argue the benefits are uneven, noting that large corporations often leverage complex tax structures, loopholes, and offshore strategies to minimize their tax burden — often paying effective tax rates well below those faced by individuals.

Tax Day 2026: Bottom line

Tax Day frustration isn’t just about how much people pay the IRS if they owe — it’s about whether tax relief is tangible and whether the system feels fair.

The 2025 tax law has arguably delivered:

• Modestly higher refunds so far
• Some popular deductions for tips, overtime, and older adults
• Expanded tax benefits for businesses and investors

But it also comes with:

• Large projected cuts to Medicaid and SNAP
• Rising deficits and debt pressure
• Inflation driven by energy markets and tariffs
• Persistent concerns about corporate tax avoidance

So, recent tax cuts may have moved some of the numbers for some, but they don't seem to have shifted public sentiment in a positive direction.

As long as tax relief feels uneven for many and the cost of living remains high, most Americans will continue to feel unfairly overtaxed.

Related

• Tax Refund Schedule 2026: When Your Money Will Arrive
• What's in the 2025 Trump Tax Bill?
• Why Your IRS Tax Refund Could Be Frozen or Delayed This Year
• How to Pay the IRS if You Owe

Question: My wife and I were delighted to find we're getting a higher tax refund of around $10,000 this year. I think we're in a good place to use the money for a fun vacation or other splurge, but, she's worried about the future and wants to save it. What should we do?

Answer: When making significant money decisions as a couple, it's common for people to want different things. Money disagreements are signs of a healthy relationship because you're communicating.

Even if those conversations are stressful, it's a good sign. Turning attention to whether you should splurge or save, there's an easy way to figure this out. All you need to do is answer a few simple questions.

1. If you lost your job tomorrow, how long could you pay your bills?

You should have an emergency fund established to cover expenses in case of a job loss. How much do you need to save? It depends on your circumstances.

If your household relies on one spouse to cover all the earnings and expenses, you'll likely need at least six months saved. Meanwhile, if both people earn around the same amount of money, three months is a good benchmark.

Where's the best place to build your emergency fund? A high-yield savings account is a great place to start because you can transfer money from your checking account to that savings account on payday and treat that money as "don't touch." Plus, with rates as high as 4.20% APY, you'll outpace inflation.

Use this Bankrate tool to find the best high-yield savings accounts for you:

2. Are your retirement savings on track to ensure your financial security for the future?

Investing that tax refund could be a huge boon for your future self, who'll thank you, especially if you're behind on where your retirement savings should be. To demonstrate, if you took that $10,000 and placed it all in a Vanguard S&P 500 index fund, in 20 years, that return could balloon to almost $40,000, using historic returns.

Obviously, this approach comes with some risk. There's no guarantee that historic returns are indicative of future performance for index funds, and if inflation continues to rise, it can impact how much your money will be worth when you need it.

Still, hypothetically earning close to $30,000 can be a smart move that helps you catch up with your retirement savings.

3. Are you carrying high-interest debt?

The average credit card APR is 19.58%, according to Bankrate. If you have a $5,000 credit card balance and make the minimum payment with the average APR, it could take you 273 months to pay it off. That's a long time throwing your money away on interest.

If you have any high-interest debt, I recommend paying that debt off first. It'll take payment(s) off your monthly budget (which you can use to pad savings or retirement), improve your credit and help you get on the road to becoming debt-free.

There are several ways of going about this. You can do the debt snowball method, in which you pay off your lowest balance first, while making minimum payments on other debts. If the $10,000 clears all your high-interest debt, consider using it for that, provided your savings are in decent shape.

4. What if none of these apply to me?

You're in the sweet spot. In this scenario, you should devote $7,000 to $8,000 to save and use the rest to splurge. It allows you both to enjoy the windfall of your tax refund.

It's a smart way to shelter from rising inflation. With diesel prices soaring, the costs of everyday goods will rise. Earmarking a significant portion of those funds to a high-yield savings account is a smart way to offset higher prices.

You'll get to benefit from it now and later. You'll get to splurge on a home upgrade or other treat, while she gains peace of mind knowing that your future selves will thank you for saving.

Related content

• IRS Tax Refund Schedule 2026: When Will Your Refund Arrive?
• 6 Steps to Quickly Build Your Emergency Fund
• Best High-Yield Savings Accounts — April 2026
• How to Invest in ETFs for Beginners

You may get a pleasant surprise from Uncle Sam this spring: A bigger-than-usual tax refund. Experts are projecting that this year may set records for refunds, both in the number issued and in the average amount returned. That's because the One Big Beautiful Bill Act, which passed last summer, included several retroactive tax changes for the 2025 tax year, such as a higher standard deduction, a higher cap on property-tax deductions and an extra deduction for most taxpayers 65 and older.

But the IRS never updated the withholding tables used to determine how much tax to take out of your paycheck and other income throughout the year.

"Unless someone went in knowing about these tax cuts and adjusted their own withholding, they overpaid taxes in 2025," says Erica York, vice president of the Tax Foundation, a nonpartisan research group. "So when people file their taxes in 2026, that's when they'll receive the benefit of those tax cuts."

The Tax Foundation projects that the average refund this year will be $3,800, up from about $3,000 for the 2023 and 2024 tax years. York says middle- and upper-income taxpayers will reap the greatest benefit, because lower-income taxpayers typically have little or no tax liability, and most of the tax changes phase out for high earners. Among taxpayers in the 60th to 80th income percentile, the Tax Foundation estimates that 98% will owe less in taxes for 2025 — $1,150 less, on average —versus what they paid in 2024.

Anticipating a tidy sum this year from Uncle Sam? Here's how to maximize the impact.

1. Reduce your financial stress.

One of the best uses for a portion of the money, experts say: Replenishing an emergency fund. If you had to dip into liquid savings to cover unexpected expenses or pay holiday bills in 2025, your refund allows you to reset after a tough financial year.

"Everyone should have three to six months' worth of living expenses in a cash reserve," says CFP Gary Williams, president and CEO of Williams Asset Management in Columbia, Md. Two-income households may need a smaller emergency fund, while single-income families might aim for the six-month benchmark.

2. Budget for upcoming expenses.

If you know you have a big bill coming up — such as college tuition payments or major car repairs — your refund can serve as a buffer, protecting the rest of your budget.

Don't know where to turn? Kiplinger did the homework for you to find the best budgeting apps. One of the best ones to consider is Monarch:

3. Do some advance planning.

Research shows that people tend to view a tax refund as a bonus or a windfall rather than as a return of their own income. That type of mental accounting often leads to spending more of the refund than you might otherwise — unless you plan ahead for how best to deploy it.

"When people have a mindset of how they're going to use the refund, whether that's earmarking it for savings or some kind of debt reduction, they're far less likely to impulse-spend once the money hits their account," says Michelle Wolff, a certified financial planner and wealth adviser at HB Wealth in Atlanta. "Preplanning effectively removes the temptation."

The more detailed your plan, the better. Studies show that those who commit in advance to saving a specific percentage of their refund and identify a purpose for the money are more likely to follow through. They also save a larger amount than those who do not make a plan.

"With those situations in mind, you definitely want to keep that refund somewhere liquid," says CFP and accountant Benjamin Dorsey, vice president of tax services at Wealth Enhancement in Annapolis, Md. "I'd look at high-yield savings accounts."

Use the tool below to explore and compare some of today's best savings account offers:

4. Max out your HSA.

If you have a high-deductible health insurance plan and contribute to a health savings account, consider adding part of your refund to it, Williams recommends. "It comes down to the fact that an HSA has superior tax benefits over a traditional investment account," he says.

HSAs, in fact, offer a triple tax advantage: Your contributions are tax-deductible, investments in the account grow tax-free, and withdrawals for qualified medical expenses are tax-free. Account holders 65 and older can tap the account for non-medical expenses without incurring the 20% penalty that younger HSA owners must pay, although you'll have to pay income tax on those withdrawals.

HSA contribution limits for 2026: $4,400 for individuals or $8,750 for those who have family coverage. If you're 55 or older, you can add an extra $1,000.

5. Split your direct deposit.

If you haven't filed your taxes yet and intend to use your refund for multiple goals, the IRS makes it easy to divvy up the money. Using Form 8888, you can direct the agency to split your refund among up to three different accounts.

Not having to deal with the logistics of moving funds to separate locations for saving, investing and spending makes it more likely you'll follow through on your intentions, Dorsey says.

6. Right-size your withholding.

This year's withholding tables have been updated to reflect the 2025 changes in tax law. So if you, like nearly two-thirds of taxpayers, typically get money back at tax time, your refund for the 2026 tax year should return to a more typical level.

Generally, though, financial advisers say you're better off trying to align the amount withheld from your income with how much you'll actually owe in taxes. That way, you can maximize immediate cash flow for savings, debt reduction or daily expenses. To update your withholding, use Form W-4 for employee wages, Form W-4V for Social Security benefits and Form W-4P for pension and annuity payments.

"It really becomes a question of people's preferences," says Tom O'Saben, director of tax content for the National Association of Tax Professionals. "Some people love getting big refunds. Other people are happy with owing some tax at the end of the year — but the smaller that number is, the better."

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

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• 5 Reasons Your Tax Refund Status is Delayed (and How to Fix It)

A little-known IRS rule and an interesting court case could mean some taxpayers get back penalties and interest they paid during the pandemic years.

Headlines make it sound huge, but the reality is more targeted, not automatic, and in flux at the moment. And, of course, most tax relief comes with deadlines.

So, the question is, are you eligible, and if so, what should you do to claim your money? Here's more of what you need to know.

Could you get a pandemic IRS refund soon?

Let's start with a little background. When COVID hit, the federal government declared a national emergency that ran from January 20, 2020, through May 11, 2023.

During that time, the IRS used its disaster authority under Section 7508A of the U.S. Code to push back various filing and payment deadlines, including due dates for 2019, 2020, and 2021 federal income tax returns.

So what? Well, a recent case in the U.S. Court of Federal Claims, Kwong v. United States, is now testing how those pandemic extensions should be applied.

In that case, the court sided with a taxpayer’s argument that some pandemic-era tax deadlines may have lasted longer than the IRS treated them. That means potentially into mid-2023, including an extra 60 days after the national emergency ended.

If that ruling ultimately holds, it could mean the IRS charged some penalties and interest too early, opening the door for refund claims.

Who might get an IRS pandemic penalty refund

Despite the big numbers being thrown around, not everyone who paid a fee to the IRS during the pandemic would be in line for a refund. The focus is generally on individuals and businesses that:

• Filed or paid late during the pandemic period and were charged penalties or interest
• Paid common IRS penalties, like late filing, late payment, or underpaying estimated taxes
• In some cases, paid additional interest tied to those charges

If you were under an IRS audit, set up a payment plan with the tax agency, or had other collection activity during that period, some of the penalties embedded in those balances could also be in play.

For people with large balances or multiple years at issue, the potential refunds could reportedly be sizable. But keep in mind, this situation is in flux and will ultimately depend on how the litigation plays out.

How the Kwong lawsuit differs from earlier IRS penalty relief

It's important to note that this situation is separate from the automatic penalty relief the IRS already rolled out for certain 2019–2021 returns.

As Kiplinger reported, in that earlier program, the IRS waived or refunded specific penalties for eligible taxpayers and issued credits and refunds on its own. (Eligible taxpayers didn't have to file special paperwork.)

This legal situation is also different from recent announcements about 2022 tax returns and refunds.

Essentially, the IRS is warning that millions who haven't filed their 2022 returns risk missing out on $1.2 billion in unclaimed tax refunds, including overpaid taxes and tax credits like the Earned Income Tax Credit (EITC). The deadline for those who did not file returns back in 2022 is April 15, 2026.

• This time, the refund opportunity stems from a court ruling, not an official, broad IRS policy. That means the tax agency isn't automatically reviewing accounts and issuing checks.
• Instead, many industry experts believe that taxpayers who may be affected will generally need to file a refund claim to preserve their rights while the legal issues are resolved.
• Some note that filing such a "protective claim" now would essentially freeze the statute of limitations for that taxpayer.

IRS pandemic penalty relief deadline

Tax refund claims come with strict time limits, usually based on when a return was filed or when the tax was paid. Because these penalties and interest date back to the pandemic years, some windows on 2020 and 2021 liabilities could start closing as soon as 2026.

As a result, some practitioners are treating mid‑2026 (i.e., July 10, 2026) as a practical "deadline" for many potential claims under this development.

There’s another catch. It wouldn't be surprising if the IRS contests the court’s reading of Section 7508A through an appeal. So, refunds under the Kwong legal theory aren't guaranteed.

How to check if you might qualify

If you’re wondering whether you’re one of the “millions” being talked about, the best place to start is your own IRS account history. You can:

• Log in to your IRS online account or pull account transcripts and look for penalties and interest posted between 2020 and mid‑2023.
• Flag any charges for late filing, late payment, underpaid estimated taxes, or interest on slow‑moving refunds tied to those years.
• Consult with a tax professional whether those items might fall under the extended‑deadline interpretation and whether it’s worth filing a refund request for penalties and interest (Form 843) in your situation.

Even if the court ultimately narrows who qualifies, this situation underscores how much timing matters in the U.S. tax system.

And for those who struggled through the pandemic and then paid extra for missed shifting deadlines, this might be a rare chance to get some of that money back.

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• IRS Tax Refund Schedule: When Will Your Check Arrive?
• How New IRS Rules Could Delay or Freeze Your Refund
• Haven't Filed Yet? 8 Steps to Take Now to Prepare

Are you one of millions of taxpayers trying to track your IRS tax refund status? Whether you're waiting for an update from the federal tax agency or simply checking your bank account daily, you might be asking yourself:

Why's my refund taking so long?

While the IRS typically processes electronic returns within 21 days, accidental errors, such as opting out of direct deposit or forgetting important documents, might trigger a manual review. According to the Taxpayer Advocate, an IRS review can turn a three-week wait into a 45- to 180-day delay.

The good news? Most of these setbacks might be preventable. To help you avoid the frustration of a stalled payout, here are five common mistakes that could accidentally delay your IRS refund status.

*Note: This article pertains to IRS tax refund status delays, not state income refunds.

1. Wrong Social Security number (SSN) or tax information could delay your refund status

The first tip might seem obvious, but having incorrect information on your tax return could seriously delay your IRS tax refund status.

In what ways might tax information be inaccurate?

• Mismatched names or Social Security numbers.
• Incorrect adjusted gross income (AGI) or filing status.
• Unmatched income documents (misreporting income from Form W-2, 1099s, etc.).
• Math errors, such as calculation mess-ups on credits or deductions.

IRS data reveal that a staggering 9 million math errors occurred in a recent filing season, leading to 8.3 million notices regarding the recovery rebate and child tax credits. Since these errors can significantly delay your federal tax refund status, you should ensure your tax work is accurate before hitting "submit" on your income return.

2. Tax refund status is delayed if not through direct deposit

Starting with tax season 2026, the IRS has effectively eliminated paper checks. This means you'll typically need to enter bank account information when filing your federal income return or risk status delays.

• While some exceptions exist (namely for those without bank access, those with disabilities, etc.), most taxpayers are required to receive any applicable tax refund via direct deposit or other electronic method.
• If no deposit information is provided, your income tax refund could be frozen or delayed, per the IRS's new rule.

If you can't open a bank account, you can use a Direct Express Prepaid Debit Card to receive your IRS income tax refund, according to the U.S. Treasury. The prepaid card functions similarly to a traditional debit card and has no enrollment fees, minimum balance requirements, or credit checks for preapproval.

3. Income tax refund delays could happen when filing a paper return

Filing a paper return can delay your federal tax refund status more than you might realize. Not only must the IRS manually enter your data (potentially contributing to longer processing times), but this filing method also adds transit delays and increases the risk of human error.

• Paper returns often require six weeks or longer to process, according to the IRS.
• Mailing your return adds, minimally, several days to a week for the filing to reach the IRS.

The IRS encourages taxpayers to file electronically for faster tax refunds. You might use free tax filing options like IRS Free File, a no-cost electronic tax preparation, or Volunteer Income Tax Assistance (VITA) to help file your return electronically (if eligible).

4. Submitting duplicate returns to the IRS could delay your tax refund

Submitting a duplicate return by mistake can delay your IRS tax refund status. Taxpayers might accidentally submit a duplicate return due to:

• Fear that the original submission wasn't received.
• When a spouse or an accountant files, and you also file, not realizing it was already done.
• "Amending" a return, such as submitting another Form 1040 to "fix" an originally filed return.

If any of these sound like you, don't panic. While multiple submissions can delay tax refunds, the IRS often catches duplicate submissions and automatically rejects them. Amended returns should use Form 1040-X after the original filing is processed instead of a second original return.

If you receive a "duplicate submission" notice from the IRS and were not expecting it, that could also be a sign of identity theft. In that case, you should follow IRS identity theft procedures to determine the root cause.

5. Forgetting to sign and date your tax documents could slow your refund

Forgetting to sign your federal tax return is another surefire way to delay your refund status, as the IRS considers unsigned tax returns invalid. Not signing your return can be easy to forget for a couple of reasons:

• Filing paper forms. While most tax software programs require you to sign before you electronically file, paper filers are solely responsible for remembering.
• Missing joint signatures. For those filing jointly as a married couple, both spouses must sign the return.

Did you forget to sign your income tax return? The IRS will typically mail it back to the address on the filing and request a signature. This process can significantly delay your federal income tax refund, but it typically results in no fees or fines from the IRS (if you're owed a refund). Wait for the notification and promptly follow the steps inside.

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As the 2026 filing season is now in full swing, some taxpayers may find their refunds temporarily delayed or even frozen due to changes in how the IRS delivers payments.

Under new rules, the tax agency is phasing out paper refund checks. As a result, refunds may be put on hold if a filer's direct deposit information is missing, incomplete, or rejected.

That is notable for a couple of reasons.

According to the latest IRS reporting, taxpayers are seeing refunds run about 10% higher on average than this time last year. The average refund amount is just over $3,700, and that's likely due to changes in the Trump/GOP tax and spending bill enacted last year.

And…recent polls suggest that many plan to use that money to pay down debt or cover essentials.

For example, a survey conducted by Atomik Research and commissioned by Metro by T-Mobile finds that 59% of Americans plan to use their tax refund to pay off debt or cover core expenses like rent, utilities, or transportation costs.

So, what's happening with frozen or delayed refunds, and what should you do if you receive a letter from the IRS about it? Read on to learn more.

Related: The IRS May Change Controversial CP53E Letters

IRS sending direct deposit letters to more than 830,000 taxpayers

As Kiplinger has reported, the federal government, including the IRS, is moving away from paper checks as part of an initiative to modernize payment systems.

Data show that paper refund checks are more prone to loss, theft, or mail delays, while electronic deposits provide faster, safer, and more efficient transfer.

As a result, taxpayers who don't provide valid direct deposit information or whose banks reject the deposit may receive a formal notice instructing them to update their banking details.

These CP53E notices are part of the new verification process to help ensure that refunds are credited to the correct accounts.

• The IRS says that when you receive the CP53E notice, you have 30 days to update or add a new bank account.
• When you do, you should receive a message indicating your bank account update was successful.
• If you don't respond to the letter, the agency says it will issue a paper check after 6 weeks.

However, the Taxpayer Advocate Service (TAS) has indicated that taxpayers should take the notices seriously and respond promptly to avoid unnecessary delays.

Why are IRS refunds being delayed?

The IRS may temporarily hold your refund if the agency cannot successfully process a direct deposit. This can happen when:

• The taxpayer didn't provide direct deposit information when filing
• The bank rejects the deposit due to an incorrect routing or account number

In any case, the IRS will issue a letter asking you to update your direct deposit information through your IRS online account.

Though, as mentioned, you usually have 30 days to respond. And yes, if you fail to respond, the IRS may eventually issue a paper check, but the process can take additional weeks.

Who's impacted by the direct deposit change?

Most taxpayers won't see major delays. The IRS reports that roughly 36.5 million refunds have already been processed so far this tax season.

However, certain people are more likely to be affected, including:

• Taxpayers who historically relied on paper checks
• Individuals who don't have a bank account or have left the direct deposit section blank
• Those who entered incorrect banking information on their returns

Also worth noting: Some taxpayers remain exempt from the electronic requirement, like certain international filers, minors, incarcerated individuals, and decedents’ estates.

IRS refund delays draw scrutiny from lawmakers

More recently, concerns about IRS processes have also drawn scrutiny on Capitol Hill.

Congressional Democrats on the House Ways and Means Committee said the agency has sent notices to nearly a million taxpayers whose refunds were delayed because they didn't include direct deposit information.

In a March 9 letter to Treasury Secretary Scott Bessent and IRS leadership, lawmakers warned the notices leave affected filers with few options to quickly receive their money, in some cases forcing them to wait 10 weeks or longer for a paper check.

They also called on the agency to explain why the notices were issued so broadly and to improve the process for taxpayers to provide or update direct deposit details to avoid similar delays in the future.

"Having reviewed the IRS notice and called the IRS phone lines, we learned that there is no simple process for these taxpayers to request an immediate release of their refund by paper check without waiting at least 10 weeks," the Democratic Lawmakers wrote.

"Effectively, the President, unilaterally through his Executive Order, is causing undue hardship on millions of Americans by delaying their paper refunds for months," lawmakers added.

IRS direct deposit letter: Bottom line

Larger tax refunds for some so far this year reflect the 2025 Trump/GOP tax legislation, which expanded deductions and other benefits for many taxpayers. While those changes are welcome news for some households, new IRS direct deposit rules and verification letters can be confusing.

Keep in mind that the IRS will only request banking information via official letters mailed, not by phone, text, or email.

If you receive a letter, update your direct deposit information through their IRS Online Account as instructed to get your refund as quickly as possible.

If you haven't filed yet, double-checking routing and account numbers before submitting your return can help prevent errors and processing delays.

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The 2026 filing season is shaping up to be a year of "refund whiplash." While the IRS reports an average federal tax refund of $2,548 (so far), state-level checks are moving at a snail's pace in several parts of the country. For many households, these delayed funds are needed to cover essentials like groceries, rent, and other bills.

Why the delays? Well, some state software and forms have to be updated to accommodate (or exclude) the new, temporary tax breaks introduced by the 2025 Trump tax and spending bill.

For example, in South Carolina, taxpayers are being forced into a manual "add-back" process, while Washington, D.C. residents are navigating a historic mid-season policy overturn that has left 42,000 early filers in limbo.

Between these complex tax shifts, agency staffing cuts, and software glitches, your state refund could be weeks away.

Read on to see if your state is on the "slow list" and how to navigate the 2026 income return backlog.

New: Why Your Federal Tax Refund Status is Delayed — (and How to Fix It)

Idaho tax refund delay in 2026

Idaho 2026 tax refunds could be delayed by up to six weeks, according to a February memo from Lori Wolff, state budget director, to Idaho's Joint Finance-Appropriations Committee. And wait times could stretch even longer.

Key reasons for 2026 Idaho refund delays:

• Budget cuts. Idaho recently reduced the budget of almost every state agency by 1% (in addition to 3% cuts made last year), resulting in fewer temporary staff to process income tax returns.
• Late-breaking tax laws. On February 11, Idaho Gov. Brad Little signed HB 559, retroactively adopting the federal Trump tax law changes for state returns, including the new car loan interest deduction and "no tax on tips."
• System updates. Because the Trump tax law changes were adopted in February, Idaho must now update its tax software and forms to comply with the new law mid-tax season.

For the 158,000 Idahoans who have already filed a state return, the Idaho Tax Commission will provide "more guidance over the next few weeks" for how these taxpayers might take advantage of the new tax breaks on their state returns.

In the meantime, taxpayers who are concerned about the tax due date and the timing of the new law changes can apply for an automatic filing extension. To qualify, a taxpayer must pay 80% of the 2025 estimated tax, or 100% of the total tax reported on last year's return, by April 15, 2026.

Why is the New York state refund taking so long?

New York taxpayers who filed early in the season may be experiencing tax refund delays due to tax software issues.

Key reasons for 2026 New York refund delays:

• New York inflation checks. New York inflation refund checks were mailed out as a one-time payment late last year.
• Third-party delay. According to several local news reports, software provider Intuit TurboTax didn't have the update installed to account for the refund checks.
• The "processing" loop. Taxpayers who filed before the TurboTax software updates were fully implemented — especially those trying to claim new federal tax breaks — may have been stuck in a processing loop, causing delays.

Note: Third-party tax software updates reportedly went into effect in early February 2026. But affected New York income returns may still be stuck in a "processing" phase. If so, taxpayers should ensure software is fully updated to the latest 2026 version before filing.

State income tax refund delay in Oregon

Oregon taxpayers who file paper returns won't have their state income return processed until late March this year, as the first paper-filed refunds are not expected to be issued until early April 2026.

Key reasons for 2026 Oregon refund delays:

• IRS delay. According to the Oregon Department of Revenue (DOR), the IRS was late in providing necessary tax form information to the state agency.
• Trump tax law changes. The delay in providing the necessary information impacts the 2025 Oregon returns. While the Beaver State did not conform to all tax law changes, several were adopted, including "no tax on overtime" and higher standard deduction amounts.
• System updates. Now, the Oregon DOR must finalize tax forms and processing systems to account for these updates, though the impact is expected to be limited to just paper-filed returns.

The state DOR is strongly advising those who still file by mail to switch to electronic filing in 2026. E-filing may be the most effective way to bypass processing bottlenecks and accelerate the delivery of Oregon "tax kicker" refunds.

South Carolina tax refund delayed in 2026

South Carolina tax refunds are expected to take longer this year, according to the state's Department of Revenue (DOR) website.

Key reasons for 2026 South Carolina refund delays:

• Trump tax law changes. Because the state legislature adjourned just before the federal tax bill was finalized, South Carolina remains "decoupled" from the new federal rules. This means that major new tax breaks — like the "senior bonus" deduction and overtime tax deduction — are not currently recognized at the state level.
• Federal taxable income. South Carolina returns begin with federal taxable income. To ensure taxpayers aren't accidentally claiming Trump tax law breaks on their state returns, the state's DOR is requiring filers to manually add back those deductions as income on their 2025 returns.
• Requiring amended returns. Third-party tax software programs initially struggled to calculate these "add-backs" correctly, leading to a surge in "Notice of Discrepancy" letters from the state's DOR and processing delays.

Taxpayers are encouraged to review their forms for errors, including accidental usage of federal tax breaks from the recently passed Trump tax law. Additionally, avoiding paper filing and choosing direct deposit may hasten tax refund distribution.

Why is my D.C. tax refund taking longer than expected?

Although technically not a state, about 361,000 Washington, D.C., taxpayers will likely soon be impacted by delayed tax refunds.

Key reasons for 2026 D.C. refund delays:

• Historic legislative overturn. For the first time in history, the United States Congress has overturned a locally passed D.C. tax and budget law. The overturned legislation had decoupled the District of Columbia tax policy from some federal provisions in the Trump tax law.
• System updates. As the law was overturned only this month, the D.C. tax systems have not been updated with the latest Trump tax bill provisions, causing uncertainty among taxpayers mid-tax season.
• Filers may have to refile. At least 42,000 residents who have already filed a D.C. tax return may have to refile once applicable software and forms are updated; for the remaining taxpayers yet to file, no official guidance has been given.

D.C. Chief Financial Officer Glen Lee outlined the negative consequences of the disapproval resolution in a joint letter to congressional leaders. Lee proposed that District income tax filing deadlines may be extended "into fall 2026."

For more information, check out Kiplinger's report, U.S. Congress Ends Emergency Tax Bill Over $6,000 Senior Deduction and Tip, Overtime Tax Breaks in D.C.

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Many Americans might have more than one reason to celebrate this year. Tax refunds for the current 2026 tax season are projected to be the "largest ever,” according to an analysis cited by the Republican-led Ways and Means Committee in the U.S. House of Representatives.

The projected increase is expected to boost the average federal tax refund amount by around $1,000 for taxpayers.

However, that benefit is not universal: the size of your tax refund, if any, will ultimately depend on eligibility requirements for tax breaks and other factors (like your filing status and taxable income).

Here are the households that may receive a higher tax refund, and some information on what refunds look like so far this tax season.

Largest tax refunds ever?

“Tax filers could expect an extra $1,000 bump to their tax refund,” The Ways & Means Committee previously reported. “[It] could be a record-breaking tax refund season.”

• The total, accumulated impact of the new law was expected to be $91 billion in additional refunds in 2026 compared to last year, according to the release.
• This potentially would translate to an average tax refund of $4,151 during the 2026 filing season, up from the IRS’s average of $3,151 last year.

The House release used an analysis conducted by Piper Sandler, a financial services firm. The results were shared with the public via a financial podcast.

Like some previous studies of its kind, the Sandler analysis finds that middle and upper-income households, specifically those earning between $60,000 and $400,000, are expected to benefit the most from the new Trump/GOP tax and spending bill.

Update: As of late February 2026, the average IRS tax refund is reportedly approximately $3,809. This is a nearly 9% increase compared to the same period in 2025 ($3,505).

Tax refunds 2026: Bigger checks

Since the Trump tax bill was passed in mid-2025, new tax benefits were not withheld from paychecks during 2025. Because of this, tax refunds are expected to be bigger for those who can take advantage of some of the new provisions.

For instance, you might receive a higher 2026 tax refund if:

• You’re a homeowner in a high-tax state. The new tax law temporarily increased the state and local tax (SALT) deduction from $10,000 to $40,000 annually for households with incomes of $500,000 or less.
• You’re an adult aged 65 or older. The new temporary “senior” bonus deduction may provide tax relief for those with a modified adjusted gross income (MAGI) of $250,000 or less ($175,000 if single filing).
• You’re a tipped employee or overtime worker. The new tip income and overtime tax deductions allow eligible working taxpayers to claim up to $25,000 in federal deductions for the 2026 filing season (for married couples filing jointly; eligible single filers may claim up to $12,500).

Yet it’s important to remember that the anticipated $1,000 increase to tax refunds is an average estimate, and not a guarantee. Your individual financial circumstances impact your overall tax refund, if any. But if you’re anticipating a bigger 2026 tax refund, the IRS recommends steps you can take now to prepare. (More on that later).

Does everyone get a bigger refund in 2026?

Some individuals might not receive a larger tax refund and may even lose out on tax savings or face higher tax bills due to the 2025 Trump/GOP tax and spending law.

For example:

• Low-income households may lose out. As reported by Kiplinger, families earning $53,000 or less could lose an average of $65 by 2033 due to certain cuts to Medicaid and other social programs, and taxpayers earning $18,000 or less could lose 1.1% of their income by 2027.
• Most future student loan forgiveness is federally taxable as of 2026. This reverses the temporary tax exemption provided by the Biden-era American Rescue Plan Act. CNBC reports that a borrower with student debt of approximately $49,321 could see a tax bill increase between $5,800 to over $10,000 in the 2027 filing season.

Note: For more information on these breakouts, read Kiplinger’s report, Biggest Winners and Losers in Trump's New Tax Plan.

IRS tax refund check projection

The IRS has urged taxpayers to prepare early for tax filing.

“It is important for taxpayers to get ready now because the One, Big, Beautiful Bill can significantly affect federal taxes, credits, and deductions,” the federal tax agency announced in a press release.

To help “avoid errors that could delay refunds,” taxpayers are urged by the IRS to gather important tax information, like:

• W-2 Forms, Forms 1099, and other key documents (though delay tax filing until all necessary information is organized).
• Bank account information, including your direct deposit account and routing numbers. Starting this filing season, the IRS is phasing out paper checks (yet limited exceptions may apply).

As Kiplinger reported, the IRS may encounter operational issues this filing season. The agency is operating with significantly reduced staff and a budget cut, which could result in longer phone wait times and even delay tax refunds.

Stay tuned.

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More than three-quarters of Americans 50 and older say they want to remain in their homes after they retire, but sharp increases in property taxes have made aging in place unaffordable.

Unlike income taxes, which often decline in retirement, property taxes are based on the value of your home — and in many parts of the country, assessed values have skyrocketed in recent years. Median property taxes rose by an average of 10.4% between 2021 and 2023, according to an analysis of the latest data available by LendingTree, an online marketplace for consumer loans. The median property tax in 2023 was nearly $3,000 ($2,969), but median property taxes in 50 metropolitan areas ranged from $1,091 to nearly $10,000, according to LendingTree.

Before writing a check for your next property tax bill, make sure you take full advantage of property tax relief programs offered by your state or locality. While more than 9 million Americans likely qualify for property tax relief, only about 8% apply for it, according to the AARP. “Many aren’t aware these programs exist or assume they’re not going to qualify,” says Nicole Heckman, vice president of well-being for the AARP Foundation.

The types of property tax relief available vary, not only by state but by individual counties and jurisdictions. Many states and jurisdictions offer expanded relief to homeowners who are 65 or older; some offer breaks to homeowners who are 61 and older. Veterans and residents with disabilities may also qualify for a reduction in their property taxes. While eligibility is often income-based, the income thresholds “can be pretty expansive,” Heckman says, so don’t assume you earn too much to qualify. In New Jersey, for example, homeowners with incomes of up to $500,000 are eligible for reimbursement of a portion of their property tax bill.

Tax relief isn’t automatic. In most cases, you must fill out an application and file it by a deadline set by your locality or state. Some jurisdictions require you to apply in person. Other states and localities allow you to apply online, but that can be challenging for older adults who don’t have broadband internet, Heckman says.

The AARP Foundation’s Property Tax Aide program, now in its fifth year, allows homeowners to research more than 140 programs in 50 states and Washington, D.C. Users can find details on eligibility, deadlines and where to get help. The average amount of relief provided through the program is $400, but some users have saved up to $1,000, Heckman says. Many states allow eligible homeowners to apply for up to three years of back tax relief, she says. “That can be a significant credit or refund.”

Some types of relief states and localities offer homeowners:

1. Tax credits and refunds

More than a dozen states offer property tax credits or refunds to eligible older adults in amounts ranging from $250 to $2,730. Pennsylvania provides rebates ranging from $380 to $1,000 for eligible older and disabled residents. Tennessee refunds all or a portion of property taxes paid by eligible residents.

Minnesota provides two types of property tax refunds: one based on homeowners’ income and the amount of their property taxes, and another based on how much residents’ property taxes have increased. (Some residents qualify for both, and the program isn’t limited to older adults.) Cindy Rieck, 68, of Pequot Lakes, Minn., whose home has nearly doubled in value since she purchased it in 2007, says she received a refund of $1,200 in 2024.

2. Expanded homestead exemption

Property taxes are based on the assessed value of your home, which may differ from its appraised or market value. A homestead exemption lowers the assessment, thus reducing your property tax bill. Most states offer some kind of homestead exemption for residents, but many states provide an additional homestead exemption for older adults.

Florida, for example, allows residents to exempt up to $50,000 of their home’s assessed value from property taxes (which will increase with the rate of inflation starting in 2025), but jurisdictions in the state have the option of providing an additional $50,000 exemption to eligible homeowners 65 and older.

Texas recently increased its homestead exemption to $140,000 for all residents. The state provides an additional $60,000 exemption for residents age 65 or older, for a total combined homestead exemption of $200,000. Texas now allows individual jurisdictions to add $3,000 to that amount.

3. Assessment freeze

In Arizona, homeowners ages 65 or older who have lived in their primary home for at least two years and meet income limits can have their property’s valuation frozen for three years. New Jersey has a “senior freeze” program that reimburses property tax increases for eligible residents who have owned their homes for at least three years.

4. Tax deferral

Illinois allows eligible homeowners 65 and older to defer up to $7,500 of property taxes on their principal residence. California, Maine, Minnesota, Vermont and Washington also allow eligible older adults to defer property taxes.

If you sign up for deferral, the state or locality will place a lien on your home; the taxes must be paid, usually with interest, after you die or sell the home. That’s important to consider when planning your estate. If your heirs sell the home, the back taxes will reduce the amount they’ll receive from the proceeds, and if they want to keep it, they’ll be on the hook for the taxes you deferred. “If you can afford it, you may decide you’d rather pay the tax now and not have something your heirs will have to worry about when they sell the property,” says Jared Walczak, vice president of state projects at the Tax Foundation in Washington, D.C., a tax-policy research organization.

Other options to cut your tax bill

Applying for property tax relief is just one way to lower your tax bill. Other options that may be available to you:

Claim a deduction
The One Big Beautiful Bill Act, signed into law in July, allows homeowners to deduct up to $40,000 in state and local taxes, up from a cap of $10,000. The provision takes effect in 2025 and expires in 2029. The legislation also expanded the standard deduction for eligible taxpayers 65 and older, so for many older adults, claiming the standard deduction will still provide the lower tax bill. However, if you live in a high-tax state and have other deductible expenses — large charitable contributions, for example — it’s worth running the numbers with your tax preparer or on a tax software program to determine whether you should itemize on your 2025 tax return.

Challenge your property tax bill
If you believe your assessment was inaccurate or outdated, you may be able to lower it by filing an appeal. Review your property’s record card, usually available on your locality’s website or by request. If you find an obvious error — four bedrooms instead of two, for example — your assessor may agree to lower the assessment on the spot.

If the information on your property’s record card is correct but you believe your assessment was higher than those for comparable homes in your neighborhood, you can use that information to file an appeal. Check your local government’s website for deadlines and procedures. Realtor.com offers a tool that will provide you with an estimate of the market value of your home, along with estimated values of other homes in your neighborhood. The tool is free but you must create an account to use it.

Note: This item first appeared in Kiplinger Retirement Report, our popular monthly periodical that covers key concerns of affluent older Americans who are retired or preparing for retirement. Subscribe for retirement advice that’s right on the money.

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A spending bill is moving forward among Republicans in the U.S. House of Representatives that could significantly cut IRS funding, jeopardizing your taxpayer experience during the 2026 filing season.

The proposed measure, which is now moving to a House vote, would reduce the IRS budget by billions of dollars. In particular, key funding for Taxpayer Services, which is responsible for processing tax returns, answering taxpayer questions, and delivering tax refunds and correspondence, is at risk of being gutted further.

The IRS enforcement budget would also be dealt another blow by the GOP fiscal funding proposal. The result could mean fewer staff and automation tools would be available to enforce taxpayer compliance, audits, and the prevention of taxpayer fraud next year.

“No phones are going to be answered, no people are going to be at the offices to help people as they come in, and of course, Direct File has been eliminated as well,” said Rep. Steny H. Hoyer (D-Md.). “Under this administration, you’re certainly on your own if you’re a federal worker.”

Let’s dive into the GOP’s budget proposal for the IRS and what it means for you.

2026 GOP Budget Proposal for the IRS: Key Points

House Republicans seek to reduce IRS funding to $9.5 billion next year, representing a 23% decrease from its current spending.

Opponents of the funding cut argue that the proposed measure could seriously impact taxpayer services during the upcoming tax season and reduce revenue for the agency.

• House lawmakers also rejected the Treasury Department’s request for $852 million for Taxpayer Services.
• That funding was intended for the IRS to hire call center representatives to maintain its current level of phone service and implement automation tools for taxpayers.

The request sought to reverse some of the Trump administration’s major staffing cuts, which have already caused strain to taxpayers seeking customer service this year.

Here’s what proposed $2.8 billion in IRS funding cuts could mean for taxpayers next year.

Risk of fewer audits and taxpayer compliance

The IRS suggests that every $1 invested in enforcement yields $7 in revenue, but House Republicans' proposed funding cuts could erode some of that funding stream.

• House Republicans' proposed 2026 fiscal budget includes a more than $2.4 billion, or 45% cut below the current IRS enforcement budget.
• This funding is allocated for IRS departments responsible for conducting financial crime investigations, including tax fraud, audits, and enforcing taxpayer compliance.

“When enforcement funding is cut, taxpayers potentially lose an important service provided by the IRS: the chance to gain clarity and, in some cases, certainty about what the tax code means for them before they file a tax return riddled with unintentional errors,” wrote Janet Holtzblatt, senior fellow at the Urban-Brookings Tax Policy Center.

Part of the services in the enforcement budget include guidance to taxpayers, like rulings and regulations. Businesses and high-income individuals often use these services, added Holtzblatt, and they aren’t cheap.

For example, a private letter ruling (the response when a taxpayer formally asks the IRS to explain a complicated tax provision that applies to their particular situation), can cost at a minimum $3,450.

The GOP’s proposed smaller enforcement budget could lead to a decrease in taxpayer services and an increase in undetected tax fraud and audit errors, warned Democratic opponents of the bill. As Kiplinger reported, for taxpayers, that means less access to customer service and a higher risk of accruing penalties.

Overall, the IRS warns that a budget cut of that magnitude will result in the agency losing billions in long-term revenue over the next couple of years.

Republicans reject funding for IRS hiring

After laying off thousands of employees from the IRS, the Trump administration sought to reverse some of the damage by asking for nearly $853 million (31% funding increase) to boost hiring at Taxpayer Services. The request was rejected by House Republicans.

The Taxpayer Services division is responsible for processing tax returns, answering telephone calls, processing taxpayer correspondence, and staffing Taxpayer Assistance Centers.

An IRS budget document warned that without the $853 million investment, the level of service provided to telephone callers would “plummet” to 16% next year, down from 87% in 2025.

“At this level of service, most taxpayers would be unable to reach the IRS by phone or receive answers to questions related to tax compliance,” the IRS noted. “Taxpayers that do get through would face long wait times.”

The lack of staff could also impact other critical taxpayer service channels, including paper correspondence and in-person assistance.

“As the name implies, [Taxpayer Services] is responsible for the heaviest lift of serving taxpayers,” Erin Collins, National Taxpayer Advocate, wrote in a report to Congress, before recommending the Trump administration lift the hiring freeze and provide the division with direct hire authority to hire essential filing-season employees for 2026.

“It is critical the IRS hire them by the end of summer so it can onboard them, provide them with adequate training, and ensure they are prepared to assist taxpayers when the 2026 filing season begins in January,” the IRS government watchdog added.

The summer is over, and the IRS is reportedly planning on allowing some employees who accepted incentives to leave the agency to return to their jobs. However, the 2026 IRS budget's outcome could impact the agency's ability to fill staffing shortages before the next filing season.

Will GOP lawmakers cut IRS funding?

According to TaxNotes (paywall), it is “highly unlikely” that the 2026 Financial Services and General Government (FSGG) bill will be enacted by September 30, the end of the fiscal year.

This is primarily because the Senate has passed its version of the bill on time only once in the last two decades. Furthermore, the current White House request for a 20% reduction in the IRS's annual budget is unprecedented, as no previous administration has sought more than a 2% cut in the past century.

As noted, the GOP proposed budget calls to cut IRS funding by $2.8 billion next year, or 23% below the current 2025 fiscal year budget.

The impact on taxpayers nationwide would be devastating, warned the National Treasury Employees Union (NTEU).

“These drastic cuts, if enacted, would turn back the clock and undo all of the progress the agency has made in recent years, resulting in backlogs, slower refunds, more uncollected taxes, and fewer tax cheats caught,” NTEU National President Doreen Greenwald said in a statement.

“This bill is not going to see the light of day in the United States Senate,” said Rep. Hoyer.

Related

• IRS Layoffs Spark Delays, Doubt This Tax Season
• Trump IRS Commissioner Billy Long Out: What’s Next for the Tax Agency?
• No New IRS Agents? What Trump’s Federal Hiring Freeze, Firings Mean for Your Taxes
• No More IRS Paper Checks: What to Know After the September 30 Deadline

You’ve heard about the recent “Trump megabill,” but how will it affect your tax refund? While some provisions could increase your tax liability next year, others might give you a serious payday.

For instance, the IRS reports that nine out of 10 taxpayers don’t itemize deductions. If that’s you, a permanently higher standard deduction could give you more money back.

However, new provisions, such as some involving the federal child tax credit, might squeeze your bottom line if you’re a noncitizen, potentially costing you more in taxes.

Several provisions in the new tax law are temporary. Those new tax benefits could go away as early as 2029.

Here are five tax policies in the so-called “One Big Beautiful Bill” (OBBB) that might increase or decrease your bottom line come tax season.

Related: Claiming the Standard Deduction? Here Are Ten Tax Breaks For Middle-Class Families in 2025

Standard Deduction

1. The standard deduction affects tax refunds

While the IRS already increased the standard deduction last fall due to inflation, the OBBB further raises it. For 2025, the standard deduction amounts are as follows:

• Married couples filing jointly receive $31,500.
• Single filers receive $15,750.
• Heads of household receive $23,625.

If you’re someone who claims the standard deduction (rather than itemizing), you could see a bump in next year’s tax refund or a corresponding reduction in your tax liability.

For instance:

• If you’re single, you’ll get $1,150 more in standard deduction dollars on your 2025 federal return compared with last year.
• If you’re married and filing a joint return, you’ll see a $2,300 increase in your standard deduction compared with last year’s return.

Note: The above amounts reflect the IRS's change to the 2025 standard deduction plus the OBBB increases.

If you’re an older adult, you could receive even higher savings on next year’s federal return under the new tax law, because the OBBB added a new bonus standard deduction of $6,000 (in addition to the usual extra standard deduction for older adults).

However, the temporary bonus deduction is dependent on modified adjusted gross income (MAGI), so you could miss out on this benefit.

The limits are $150,000 for married, filing jointly couples and $75,000 for single filers. The phaseout is 6% for every dollar above the income limits.

Here's an example to show how this works.

• A married, filing jointly couple who earns $150,000 and where both adults are 65 and older could receive a full $12,000 bonus deduction on their return.
• Yet, if that same couple were making $160,000 ($10,000 above the limit), the deduction is reduced by $1,200 (6% x $10,000 multiplied by two, since both adults are above 65).
• This would result in a deduction of $10,800 for the couple, rather than the full $12,000 benefit.

It’s also important to note that the OBBB permanently ended the personal and dependency exemption, which was $4,050 per qualifying taxpayer, spouse and child (indexed for inflation).

That change is likely to permanently decrease your tax refund, especially if your household has many people who would’ve qualified for the exemption.

SALT Deduction Cap

2. The ‘SALT refund’: How much is it?

If you itemize your federal return and live in a high-cost area, you could see a reduction in your tax liability. That’s because the state and local tax deduction (SALT) changed under the OBBB.

Most taxpayers claim the standard deduction these days. However, more Americans itemized their deductions before the 2017 Tax Cuts and Jobs Act (TCJA) capped SALT at just $10,000. Before that, the deduction was unlimited.

States with high property taxes and/or state income taxes, such as New York, New Jersey or California, might have suffered the most from the $10,000 cap on the SALT deduction, since they haven’t been able to fully deduct these types of taxes on their federal return since the TCJA was enacted.

But the OBBB temporarily increases the SALT cap to $40,000, meaning you could save more on federal 2025 taxes if you live in a high-cost area.

Let’s look at an oversimplified example to see how that might work:

• A couple with $200,000 in income claims the standard deduction for tax year 2025 and has no other credits, deductions or alternative minimum tax (AMT) liability. Their taxable income is $168,500 ($200,000 gross income minus $31,500 standard deduction).
• If that same couple were to pay $43,000 in state and local taxes that year, they might choose to itemize. This would reduce their taxable income to $160,000 ($200,000 gross income minus the $40,000 SALT cap).
• The net effect is an $8,500 reduction in taxable income on their federal return.

It’s worth mentioning that the SALT cap increase is temporary and will revert to $10,000 in 2030.

Taxpayers with $500,000 or more will have a 30% phaseout for every dollar their income exceeds the limit. The SALT cap reverts completely to $10,000 for incomes of $600,000 and higher.

Are you a high-income taxpayer? If so, here’s a simple example of how the new SALT cap deduction might impact you:

• A single filer makes $505,000 per year in MAGI and wishes to itemize to take the SALT deduction.
• Yet, $505,000 is $5,000 above the income limit, meaning the deduction is reduced by $1,500 ($5,000 times 30%).
• The total SALT deduction for this filer would be $38,500.

Child Tax Credit

3. How much money will I get back for a child tax credit?

The OBBB also changed the federal child tax credit (CTC) for qualifying children 17 and under by increasing the maximum amount from $2,000 to $2,200 (adjusted annually starting in 2026).

If you’ve got qualifying kids, the extra $200 you’re getting from the child tax credit could raise your next tax refund (or at the very least, lower your tax bill).

• For example, a couple with $350,000 and two children under 17 would see $4,400 in child tax credit savings.
• That’s $400 higher than last year’s federal return.
• Families with four children could also see an increase in child tax credit breaks from $8,000 to $8,800.

However, the CTC is reduced by $50 for every $1,000 (or fraction thereof) that your MAGI is above specific income thresholds.

These income caps remain at $200,000 or more (for single filers) and $400,000 or more (married filing jointly couples). If you make above those amounts, you’ll likely see less benefit from the new child tax credit in your tax refund:

• A single filer with one child age 17 and under and an income of $200,000 would see $2,200 in child tax credit savings.
• But if that same filer made $205,000 instead, their maximum child tax credit would be reduced by $250 ($5,000 is five times above the income limit, so $50 times 5 is $250).
• The total tax credit would then be $1,950 ($2,200 minus $250).
• Before the OBBB, the single filer with $205,000 would’ve seen a total tax credit of $1,750 ($2,000 minus $250).
• The net gain under the new law is $200.

But the new child tax credit doesn’t benefit everyone. Households with noncitizen parents might see an increase in their 2025 tax bill. That’s because the child tax credit now requires parents to have a Social Security Number (SSN).

As Kiplinger reported, this means that nearly 2.7 million children in the U.S. who previously qualified will no longer be eligible for the credit due to their parents’ immigration status, leading to a potential $5.94 million loss in tax savings ($2,200 multiplied by 2.7 million).

Tax on Tips and Overtime

4. Will I get a bigger tax refund if I work overtime or for tips?

Tax on tips also changed under the new Trump tax bill, though perhaps in an unexpected way. Prior law dictated that cash tips (including credit and debit card charges) were taxed like ordinary income.

Now, under the OBBB, there’s a temporary deduction for tips up to $25,000, subject to an income phase-out (more on that below).

Are you a service worker? Here’s a simple example of what the no tax on tips law might look like for you:

• A server at a popular restaurant earns $20,000 in annual tip income.
• On last year’s tax return, the server claimed the standard deduction and had no other income or tax breaks. The total taxable income on their federal return was $5,400 ($20,000 minus the $14,600 standard deduction for single filers).
• In 2025, that same server could have zero federal income tax if they claim the tip deduction ($20,000 minus $15,750 standard deduction, minus the $25,000 maximum tip deduction).

It’s important to note that the IRS hasn’t yet squared away the definition of what a “tipped employee” is, yet. It’s unclear which workers will be affected.

Once more, workers who don’t ordinarily receive tips, such as retail sales clerks, cooks or childcare workers, will most likely not gain a benefit from this law. Meanwhile, tipped workers earning more than $150,000 (or $300,000 for joint filers) will see a phaseout of the tip tax deduction.

For more information, check out Kiplinger’s report New 'No Tax on Tips' Bill Approved for 2025: What to Know Now.

Similarly, overtime rules changed with the new tax bill. The OBBB created a no tax on overtime deduction worth up to $12,500 for tax years 2025 through 2028. The deduction has the same income phaseouts as “no tax on tips” at $150,000 for single filers and $300,000 for married, filing jointly couples.

Are you an overtime worker? The “no tax on overtime” could increase your tax refund or lower your federal tax liability, regardless of whether you itemize or claim the standard deduction.

Note: Non-cash tips (like artwork) are still fully taxable as ordinary income and not eligible for a tip income deduction. Payroll taxes and state/local income taxes also still apply.

Business tax provisions

5. Key small business taxes: QBI, bonus depreciation and more

Several key tax provisions affecting small businesses are included in the OBBB. Here are a few:

• Permanently extending the “Qualified Business Income” (QBI) tax rate. QBI is the income your business earns after deducting qualified expenses (such as rent, utilities, business loan interest, etc.). The OBBB made the 20% deduction rate permanent.
• Making permanent “bonus depreciation.” Qualified property that you buy and place into service after January 19, 2025, is now eligible for immediate 100% expensing. Ordinarily, you’d have to wait to expense the asset above five, 10, 15, even 20 years.
• Providing more opportunities to use “Section 179” expensing. Similar to bonus depreciation, Section 179 allows businesses to deduct 100% of qualified equipment and software. But there’s a deduction limit, which makes it more beneficial for small businesses vs large corporations. OBBB increased the maximum deduction amount and phase-out threshold for expensing.

All three of these provisions could help small businesses save on their taxes in 2025.

For instance, QBI only applies to businesses set up as a “pass-through entity,” like plumbers, accounting firms, and graphic designers (certain limits might apply). Maintaining the rate allows business owners to deduct more income (compared with before the TCJA), and lower income taxes paid.

Another helpful provision in the OBBB affects Section 179 expensing.

• This special type of expense is generally for small to midsize businesses due to its dollar limits.
• The OBBB increased these limits, allowing businesses to now deduct up to $2.5 million in property (up from $1.25 million).
• Likewise, the phase out is $4 million (up from $3.13 million).

Are you a small business owner? Let’s look at a very simplified example to understand how Section 179 and bonus depreciation can work together to maximize your tax savings:

• Pineapple Plane Company purchased one new plane for $2 million in 2025. Under Section 179, the company deducts the entire cost this year, resulting in a $2 million reduction in taxable income.
• Now, let’s say Pineapple instead purchased a megaplane for $3 million. Under Section 179, the company can only deduct $2.5 million per year. That leaves $500,000 undeducted.
• But bonus depreciation allows Pineapple to deduct the remaining $500,000 if the company started using the plane after January 19, 2025.

Note: The Section 179 deduction cannot exceed the business’s taxable income. The example also assumes the planes have a depreciable life of 20 years or less.

What to watch for next tax season

While we covered five major ways your tax refund might be affected this year, other provisions in the OBBB and IRS changes could affect your taxes. Here are a few more to watch:

• New temporary car loan interest deduction, allowing you to deduct up to $10,000 in interest paid on new vehicles, subject to income phase-outs.
• New Trump Accounts, which might help your child save for future educational, homeownership, and entrepreneurial costs.
• After September 30, the IRS will stop sending paper checks. If you're someone who likes to receive your tax refund via the mail, you'll need to opt for a digital payment instead next filing season.

As always, it’s important to keep an eye on the ever-changing tax landscape, both on Capitol Hill and in your state and local governments. Consult with a tax professional on your specific financial situation.

Several provisions listed above are expected to receive additional clarification from the IRS by October 2025. Stay tuned for more updates.

More OBBB Changes

• New Cap on Gambling Loss Deductions Begins Soon
• The 2025 EV Tax Credit: Yes, It's Ending
• New Medicaid Cuts: Is Your Local Hospital Closing?
• Student Loan Forgiveness: How Taxes and Repayment Could Change

The IRS has gone through unprecedented changes this year, and some developments orchestrated by the Trump administration have aggravated existing challenges.

The National Taxpayer Advocate, Erin Collins, released her fiscal year 2026 Objectives Report to Congress. While the government watchdog noted that the 2025 filing season was successful, there are several problem areas the agency has struggled to address.

These include refund delays for victims of identity theft, a lack of transparency on the agency's modernization strategy, and workforce challenges. Some of these problems are just the tip of the iceberg, but they can impact your experience as a taxpayer — with some folks already facing doubt as to how to address their taxpayer questions.

Here’s more of what you need to know about what to expect when tax season rolls around.

IRS Taxpayer Advocate Report cites several issues

While the 2025 tax season is over, a shrinking workforce and a lack of stable leadership in the IRS this year are starting to show cracks in the foundation of the agency. Research projects and modernization efforts are being suspended, and some folks are still waiting on refund delays.

These challenges can potentially worsen if the GOP keeps in promise to sunset programs like IRS Direct File, reduce allocated funding, and continue to cut down the workforce.

“As a recently retired IRS employee (took the Deferred Resignation Program) and an incredible 35-year career, it saddens me to see our agency suffer the personnel loss of hard-working and knowledgeable people,” wrote Martiza Flores-Travanti on LinkedIn, explaining that she’s had more friends and acquaintances unable to resolve issues with the IRS.

“I’m afraid we will all be receiving the ‘phone from a friend’ calls,” Flores-Travanti added. “The services to everyday Americans is diminishing. AI can’t do it all!”

IRS workforce challenges

The IRS started the year with a headcount of over 102,000 federal employees, and six months into 2025, that figure has dropped to just 75,702.

The changes to the agency came almost as soon as President Donald Trump was sworn into office, and created Elon Musk’s led Department of Government Efficiency (DOGE). The tech billionaire’s external government entity was tasked with dismantling federal agencies and other spending.

As reported by Kiplinger, the layoffs at the IRS impacted nearly every division. By the end of the 2025 tax season, more than 25% of the agency’s workforce had been cut down via layoffs, buyouts, or attrition.

Not to mention, this year, the IRS has been operating without consistent leadership.

• The agency had five commissioners or acting commissioners during the first four months of the year.
• Many of its most experienced leaders chose to leave the agency voluntarily.
• This left the agency with fewer frontline employees and managers with less experience to carry out the tax season.
• Trump’s controversial pick for Commissioner was just recently confirmed well past the 2025 tax season and had previously advocated for abolishing the IRS.

Taxpayer Services lost 1,836 during Trump’s first deferred resignation offer, and another 4,896 in its second resignation offer. A total of 829 cut ties with the IRS through a voluntary early retirement or voluntary separation incentive program.

The areas impacted, like Taxpayer Services, are responsible for processing tax returns, answering taxpayer phone calls, and more.

Already, the lack of IRS employees has caused important projects to be suspended. The agency sent a notice on July 1 that its Joint Statistical Research Program (JSRP) is on hold due to “unforeseen circumstances.” That division was designed to support research projects and use tax microdata to address tax administration research questions.

“Due to current staffing limitations, Statistics of Income (SOI) is unable to provide the necessary support for new projects,” the memo said.

The Trump administration plans a 20% reduction in appropriated IRS funding next year, which would amount to an overall 37% reduction in funding after counting the decrease in supplemental funding from the Inflation Reduction Act (IRA).

For now, all federal hiring efforts have been paused by the Trump administration. The Taxpayer Advocate recommends lifting the hiring freeze and providing a direct hire authority so Taxpayer Services can hire “essential filing season employees” this summer, and onboard them in time for the 2026 filing season.

Identity theft remains a weakness

The last problem you want to deal with as a taxpayer is having your identity stolen. What’s worse: getting that issue resolved will take years.

The IRS has promised over the past 18 months that it’s been working to resolve the Identity Theft Victim Assistance (IDTVA) cases, but the backlogs continue to this day. The agency handles two types of identity theft cases.

1. Potentially fraudulent. These are cases that the IRS processing filter flags as a risk. Taxpayers whose returns were incorrectly flagged must authenticate their identity to receive their refunds. The process can take several months to be resolved.
2. Stolen identity. These cases involve an individual stealing a taxpayer’s identity and Social Security number to file a tax return.

By the end of the 2025 filing season, the IRS had about 387,000 second-category cases in inventory, according to the NTA. These cases take an average of 20 months to resolve.

Some of the delays are also linked to a lack of personnel handling IDTVA cases. As reported by Kiplinger, the agency has been known to siphon employees from various departments to help Taxpayer Services during the filing season. This year was no different.

The IRS planned on siphoning identity theft personnel to assist Taxpayer Services in answering phone calls. Now, as both departments' workforce has been cut further, there’s no telling how Trump’s downsizing of the agency will impact pending IDTVA cases.

“Apart from the time and frustration these delays cause, victims entitled to refunds are waiting nearly two years to receive them,” wrote Collins. “We found these delays disproportionately affect vulnerable populations dependent on their refunds to meet basic living expenses.”

IRS modernization plan?

The IRS has relied on an outdated technology system for decades, with some “legacy” equipment dating back more than 25 years.

It’s not a new problem area by any means, and the IRS has acknowledged it has to modernize its systems. However, recent budgetary challenges and a shift in priorities, driven by Elon Musk’s Department of Government Efficiency (DOGE), have led to the suspension of some ongoing modernizing initiatives.

Before DOGE made a splash at the IRS, the agency had made notable strides to update its systems, enhancing online account features, increasing cybersecurity protocols, and launching new online tools like IRS Free File (which is now on the GOP chopping block)..

Musk’s DOGE, in partnership with the Treasury Department, believes that the IRS can effectively automate much of the agency’s work currently performed by employees. However, using AI to substitute employees has raised some concerns.

For instance, there’s no telling how AI can ensure fair compliance, provide quality service, and safeguard taxpayer privacy, according to the Taxpayer Advocate. So far, the IRS has no clear plan on how it will modernize its systems — another pain point for future taxpayer experience.

“Without such transparency, there is a real risk these initiatives could stall or deviate from their intended outcomes,” wrote the NTA.

What’s been long overdue is the digitization of paper. The IRS continues to buckle under the strain of paper returns, even during the 2025 tax season.

• The agency estimates that it would receive roughly 43 million paper tax returns and 19 million paper information returns in 2025.
• It also sends nearly 170 million paper notices to individual taxpayers and receives millions of mailed responses.
• For some taxpayers, any delays can lead to slower refunds.

While the IRS launched its Paperless Processing Initiative in 2023, the agency failed to meet its goal of digitally processing all paper-filed returns by the 2025 filing season.

“I often remarked that paper is the IRS’s kryptonite, and the IRS is buried in it,” wrote Collins, before adding that paper continues to be a vulnerability that “continues to hinder the agency’s effectiveness.”

Bottom line for the IRS

The IRS has undergone significant changes this year that can impact you as a taxpayer.

The 2025 tax season was “the smoothest yet,” as most taxpayers received their refunds without significant delays. As of April, the agency received over 140 million individual income tax returns and processed 138.1 million individual returns. Additionally, some 86 million refunds had been delivered, with an average refund of $2,942.

Still, nearly 3.4 million returns had been suspended due to errors, potential identity theft, or other issues. These delays add to other backlogs that still linger from past tax filing seasons:

• Some Employee Retention Credit (ERC) claims have remained pending since the pandemic.
• Identity theft cases can take up to two years to be resolved.
• Republican lawmakers want to eliminate IRS Direct File, a free filing service that relieves processing burdens for the agency's employees.

Here’s the latest on IRS changes:

• IRS Layoffs Spark Delays, Doubt This Tax Season
• IRS Shakeup: What Trump’s Commissioner Pick Could Mean for Your Taxes
• Trump Plans to Terminate IRS Direct File program

Each week, in our Ask the Editor series, Joy Taylor, The Kiplinger Tax Letter Editor, answers questions on topics submitted by readers. This week, she’s looking at questions on paper checks, hurricane deductions, IRAs and timeshare losses (Get a free issue of The Kiplinger Tax Letter or subscribe.)

1. The IRS and Paper Checks

Question: I heard that the IRS will no longer accept paper checks from taxpayers after September 30. Is that accurate?

Joy Taylor: Yes and no. President Trump signed an executive order earlier this year mandating that the Treasury Department get rid of paper checks for recipients of benefits, tax refunds and other payments, effective October 1. He is ordering all federal departments and agencies to use electronic funds transfers, including direct deposit, prepaid card accounts and other digital payment options. That means that after September 30, the IRS should no longer be sending out tax refunds in the form of paper checks. There will be limited exceptions.

That executive order also discusses prohibiting people from mailing paper checks to the government, such as when a taxpayer sends in a tax payment via paper check to the IRS. However, it doesn’t appear that the September 30 deadline applies to government receipts, as it does to government disbursements. Instead, the White House executive order doesn’t set a date, but uses the phrase “as soon as practicable” for this purpose.

2. Traditional IRA and Roth IRAs

Question: Can an individual have a traditional IRA and a Roth IRA at the same time, and can they make contributions to both accounts in the same year?

Joy Taylor: Yes, an individual may have a traditional IRA and a Roth IRA at the same time, and the owner can make contributions to both in the same year. However, the aggregate amount of contributions to those IRAs (traditional and Roth) in a year is limited. For 2025, the IRA contribution limit is $7,000 ($8,000 if you are 50 or older). For example, if you are 55 and contribute $3,000 to a traditional IRA in 2025, you can only contribute up to $5,000 to a Roth IRA in 2025.

Note that you must also have compensation, such as wages or self-employment earnings. And there is an income ceiling on making contributions to a Roth IRA. For 2025, the ability to make contributions to a Roth IRA phases out at adjusted gross incomes of $236,000 to $246,000 for joint filers and $150,000 to $165,000 for single filers. This income ceiling doesn't apply to contributions to a traditional IRA.

3. Prior-Year Hurricane Losses

Question: I live in Florida, and in 2022, my home suffered serious damage from Hurricane Ian. I’ve heard the government has recently changed the deduction for disaster losses. But I already filed my 2022 tax return in early 2023. How can I take advantage of this change?

Joy Taylor: Personal casualty losses can be deducted to the extent the losses are attributable to federally declared disasters, such as hurricanes, earthquakes, wildfires, blizzards or flooding, that affect a wide area. Individuals can deduct personal losses on their Form 1040 to the extent not reimbursed by insurance. Your loss is equal to the smaller of the damaged property’s adjusted basis or decline in value, less any insurance proceeds you received or expect to receive.

Legislation passed by Congress last year has tax easings similar to those given to victims of federally declared disasters in 2018-2020. The relief generally applies to disasters that took place in 2021-2024. This would include damage to your home from Hurricane Ian. The law lets individuals deduct personal disaster losses even if they don’t itemize on Schedule A. You can write off uninsured personal losses in excess of a $500 threshold without regard to the "10% of adjusted gross income" offset that generally applies to disaster loss deductions. This net loss is treated as an additional standard deduction for nonitemizers.

Since you have already filed your 2022 Form 1040, you can amend it to take the more generous disaster loss deduction by filing Form 1040-X. Note that you generally have three years from the date you filed your original return to file Form 1040-X to amend your return. If you filed your original return before the April 15 due date, then you have three years from the original April 15 due date to file an amended return. For example, if you filed your 2022 return on March 24, 2023, you have until April 15, 2026, to amend it. When amending your return, you would use Form 4684 to calculate the loss. Follow the instructions on Form 4684 for reporting a “qualified disaster loss.”

4. Selling a Timeshare

Question: I own a timeshare, and I am thinking of selling it. Will I have to pay federal income tax on the sale?

Joy Taylor: Most people who sell a timeshare sell it at a loss. Losses from sales of timeshares held for personal use are nondeductible. If you’re one of the lucky few that sells a timeshare at a profit, you will have capital gain equal to the sales price less your tax basis in the timeshare. Different tax rules apply to sales of timeshares held for rental or mixed personal/rental use.

About Ask the Editor, Tax Edition

Subscribers of The Kiplinger Tax Letter and The Kiplinger Letter can ask Joy questions about tax topics. You'll find full details of how to submit questions in The Kiplinger Tax Letter and The Kiplinger Letter. (Subscribe to The Kiplinger Tax Letter or The Kiplinger Letter.)

We have already received many questions from readers on topics related to inherited IRAs, energy upgrades made to a home and more. We’ll answer some of these in a future Ask the Editor round-up. So keep those questions coming!

Not all questions submitted will be published, and some may be condensed and/or combined with other similar questions and answers, as required editorially. The answers provided by our editors and experts, in this Q&A series, are for general informational purposes only. While we take reasonable precautions to ensure we provide accurate answers to your questions, this information does not and is not intended to, constitute independent financial, legal, or tax advice. You should not act, or refrain from acting, based on any information provided in this feature. You should consult with a financial or tax advisor regarding any questions you may have in relation to the matters discussed in this article.

More Reader Questions Answered

• Ask the Editor: Questions on Tax Deductions and IRAs
• Ask the Editor: Questions on Home Sales and Taxes
• Ask the Editor: Questions on Hobby Losses, Medicare
• Ask the Editor: Questions on Trump's Big Beautiful Bill
• Ask the Editor: Questions on capital gains

The tax deadline for U.S expats was June 16, but there are some tax credits and deductions you can still claim if you're an American living abroad.

Living overseas won’t let you off the hook from certain tax obligations, as you’re still required to file a tax return with the IRS. For some taxpayers, that means facing the burden of double taxation or having to file taxes both in the U.S. and their country of residence.

One of President Donald Trump’s campaign pledges included ending what some consider unfair double taxation for American expatriates. But the Trump administration has yet to keep that promise, so Americans living overseas needed to file their 2024 tax returns by the extended June 16 deadline.

Each year, many Americans choose to retire abroad to save on taxes. Luckily, there are ways you can reduce your U.S. tax burden further through credits and deductions.

There’s more: One of the tax credits on this list may be enhanced under the GOP’s version of Trump’s ‘One Big Beautiful Bill.’

Here are some key tax breaks that you don’t want to miss out on in 2025.

1. Foreign Earned Income Exclusion

One of the most popular tax breaks for U.S. expats is the foreign earned income exclusion (FEIE), which allows you to exclude some or all of your foreign earned income from your federal income taxes.

For the 2025 tax year (taxes due in 2026), eligible taxpayers can exclude up to $130,000 of their foreign earned income (that’s up from $126,500 for the 2024 tax year).

The exclusion is calculated using IRS Form 2555 and helps prevent double taxation on income earned abroad.

The FEIE is available to U.S. expats who:

• Have earned income from work in a foreign country
• Are self-employed and work outside of the U.S. or Puerto Rico
• Pass either the Bona Fide Residence Test or the Physical Presence Test

Taxpayers must also be physically present in a foreign country for at least 330 days during the tax year to claim the FEIE.

2. Foreign Housing Exclusion

If you live abroad as an American, you can also get a potential federal tax break for your housing expenses with the foreign housing exclusion or a deduction. This benefit can be used alongside the foreign earned income exclusion (FEIE).

The foreign housing exclusion or deduction must be for your tax home, meaning that the property is located in your main country of employment, post of duty, or business.

What’s the foreign housing exclusion? This tax break allows you to exclude qualified housing expenses from your foreign income. Generally, this is up to 30% of the maximum foreign income exclusion.

• For tax year 2025 (taxes filed in 2026), that amount is $39,000.
• The limit for 2024 (taxes typically filed earlier this year) was $37,950.
• This limit can vary depending on the location of your foreign tax home and the number of qualifying days in the tax year.

The foreign housing deduction works differently. The main difference is that only self-employed expats can claim this tax break.

3. Foreign Tax Credit

Taxpayers who paid or accrued certain foreign taxes can reduce their double tax burden by considering the foreign tax credit (FTC). To claim this credit, a tax must be imposed on you by a foreign country or a U.S. possession. For example, this can be a tax on an estate or investment.

Unlike the FEIE, the FTC provides a dollar-for-dollar credit for foreign taxes paid and applies to both earned and passive income. This tax break also allows taxpayers to carry over unused credits in future years.

You can claim this credit by filing the IRS Form 1116. Corporations must file IRS Form 1118 to claim the foreign tax credit.

On the flip side, if you want to itemize your deductions on foreign taxes, file a Schedule A (Form 1040). A few examples of itemized deductions include medical expenses, gifts to charities, and job expenses.

4. Child Tax Credit 2025

The federal child tax credit (CTC) is a tax break designed for families with qualifying children, and it's available to U.S. citizens who reside in foreign countries.

Here’s the catch: You won’t be able to claim the CTC if you use the foreign earned income exclusion, but you can if you claim an FTC.

As it stands, eligible households can claim up to $2,000 per child under the age of 17. If the credit surpasses your tax liability, you can receive some or all of the difference as a refundable credit.

• The refundable portion of the CTC, known as the Additional Child Tax Credit, is worth 15% of a family's earnings above $2,500 — up to a maximum of $1,700 per child for tax year 2024 (taxes typically filed in 2025).
• This credit phases down once a household income surpasses $200,000 for single parents or $400,000 for married couples.

Potential changes for the CTC

This version of the federal child tax credit under the Tax Cuts and Jobs Act of 2017 (TCJA) is slated to expire this year. If the Republican-controlled Congress doesn’t pass a legislative tax package, this means that the CTC will revert to $1,000 per child under age 17 after the end of the year.

As reported by Kiplinger, Republican lawmakers have proposed an expanded CTC in their version of Trump’s One Big Beautiful Bill.

The measure, which is currently undergoing revisions at the U.S. Senate, proposes the following changes to the CTC:

• Increasing the full child tax credit amount to $2,500 per child through 2028.
• Setting the full credit amount to $2,000 for subsequent tax years.
• Applicants must have a Social Security number to qualify for the credit.

For more information on how the would-be expansion of the child tax credit would work, see: Here’s How the Child Tax Credit Could Increase Under Trump.

Need more time to file your taxes?

While most taxpayers file their taxes on April 15, the IRS automatically grants U.S. expats a two-month extension. This year, that deadline is June 16.

If you need more time to get your tax documents in order, you can request an additional extension through Oct. 15, 2025. However, you’ll have to act fast to avoid penalties.

• To request an extension, you must file a Form 4868 (Application for Automatic Extension of Time to File U.S. Individual Income Tax Return) before June 16.
• Keep in mind, an extension to file does not exempt you from interest on unpaid taxes.
• Interest continues to accrue as of April 15, per IRS regulations.

Living abroad as an American can have its set of advantages and tax perks, as some countries can allow you to stretch your retirement savings. For instance, many Americans flock to Panama for its retirement benefits and no tax on inheritance.

Still, you’ll have to meet U.S. tax obligations for the time being. If you’re unsure of how to handle your taxes while living overseas, or want more tips on which tax breaks you may be eligible for, consult an international legal or tax professional.

For more tax tips for U.S. expats:

• Retirement Abroad? Three Countries Without Inheritance Tax
• Three Reasons to Retire in Panama in 2025
• IRS Tax Deadlines for June 16, 2025

Now that most of us have filed our tax returns, it can be very tempting to move on. But that return is more than a historical document — it’s a detailed snapshot of your financial life, and when reviewed thoughtfully, it can act as a powerful planning tool.

However, the majority of Americans miss this opportunity. According to a study by the American Institute of CPAs, only 27% of individuals use their tax return to inform or adjust their financial plan each year.

This article is written by CPA Jennifer T. Stephenson, who is also the chief planning officer at SignatureFD, where she is involved in all levels of servicing clients’ financial planning needs.

That means nearly three-quarters of taxpayers overlook a uniquely comprehensive source of insight that could help optimize their long-term financial strategy.

With the right lens, your 2024 tax return can reveal where your investment strategy may be generating unnecessary tax exposure, opportunities to better manage cash flow and the potential to fine-tune your charitable and savings strategies.

Here are a few key areas to consider:

1. Assess investment tax efficiency

Your tax return can offer a wealth of insight into how your investments are impacting your overall tax liability.

• Capital gains and losses. If you sold investments during the year, your return will reflect realized gains or losses. This information is essential when considering strategies such as tax-loss harvesting, which can help offset future gains, or when thinking about rebalancing out of highly concentrated positions.
• Interest and dividend income. Form 1040 and Schedule B (Interest and Ordinary Dividends) detail the income generated by your accounts. If your taxable accounts are generating high levels of non-qualified dividends or interest, it may be worthwhile to revisit how your assets are allocated across taxable and tax-advantaged accounts.
• Maximize tax-advantaged account contributions. If you’re not yet maxing out your contributions to a 401(k), health savings account (HSA) or individual retirement account (IRA) on an annual basis, your return can help identify room for increased savings. In some cases, a Roth IRA or Roth 401(k) may be appropriate, particularly for those in lower tax brackets or earlier in their careers.
• Review asset location strategy. Your return can also help clarify whether the right assets are held in the right types of accounts. Income-generating assets, for instance, are often best placed in tax-deferred or tax-exempt vehicles, while tax-efficient investments can typically be held in taxable accounts to help minimize your overall tax burden.

2. Optimize giving and medical expense strategies

Your deductions also serve as an opportunity to be more strategic with charitable giving and health care planning.

• Charitable contribution planning. If you typically give to charitable organizations but do not itemize deductions, you may benefit from bunching multiple years of contributions into a single tax year. Donor-advised funds (DAFs) and gifts of appreciated securities can further enhance both tax efficiency and philanthropic impact.
• Medical expense timing. If your qualified medical expenses approach the deductibility threshold — 7.5% of adjusted gross income — consider consolidating planned procedures or care costs into a single tax year to maximize their potential deductibility.

3. Refine cash flow and withholding management

Beyond deductions and investment income, your tax return offers valuable insights into your cash flow management. Understanding your options is especially important in times of economic uncertainty.

• Evaluate withholding and estimated payments. An unexpected balance due or an overly large refund may indicate that your withholding or estimated tax payments are out of sync with your actual income. Adjusting now can help avoid surprises — and penalties — when you file your 2025 return.
• Reinvest surplus income strategically. If you’re receiving dividend or interest income that you do not rely on for living expenses, reinvesting that income can help build wealth over time. This approach supports dollar-cost averaging, a strategy that can reduce the impact of market volatility while building your portfolio for the long term.

4. Begin planning for next year now

Your recent tax return offers a clear view of where you were financially in 2024. Leveraging it thoughtfully allows you to chart a more intentional course forward.

For example, if you’re able, consider frontloading contributions to accounts like IRAs or 529 plans early in the year. This allows your investments more time to grow and helps you take full advantage of tax benefits.

Looking for expert tips to grow and preserve your wealth? Sign up for Building Wealth, our free, twice-weekly newsletter.

You can use this moment to meet with your financial planner. Together, you can work to ensure your investment and tax strategies are working in harmony — and that your financial plan is evolving alongside your life and your goals.

We believe tax planning should never be a once-a-year exercise. When integrated into your broader financial strategy, it can become an engine for long-term growth and greater peace of mind.

Related Content

• 10 Ways to Refine Your Financial Plan for a More Secure Future
• Financial Planning: The Best Defense Against Financial Fear
• Five Financial Tips to Help You Plan for the Unexpected
• How to Invest Your Tax Refund

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Are you expecting a tax refund this year? Millions of taxpayers are, but as many as 1 million individuals could unknowingly be missing out.

The average refund amount this tax season was $3,116, according to the latest data from the IRS. As of April 4, the tax agency has paid over $211 billion in tax refunds after processing over 100 million tax returns. More than 140 million individual tax returns were expected to be filed by the April 15 deadline.

For many U.S. households, the federal tax refund is the largest check they will receive this year. Some folks, particularly those who don’t file because they don’t earn enough, may be missing out on a bunch of tax breaks and deductions.

The IRS warns that close to a million individuals who fail to file prior-year returns are potentially owed a tax refund each year. Even though the April 15 federal deadline has passed, the IRS doesn’t penalize you if you’re due a refund check.

Here are some popular tax credits you don’t want to skip. Some could be expiring this year.

You may qualify for the Earned Income Tax Credit

The earned income tax credit (EITC) is a federal tax break designed for workers with low- and moderate-income, with or without children who work part or full-time. It’s also a refundable credit, meaning you can get a refund even if you don’t owe taxes.

Nationwide, 23 million eligible workers received $64 billion in EITC last year. As reported by Kiplinger, the average taxpayer received about $2,743 in tax credits for the 2023 tax year (taxes filed in early 2024). This year, your refund could be bigger.

• For 2024, the EITC is worth up to $7,830 for eligible families with three or more children, up from $7,430 the previous year.
• Meanwhile, eligible workers ages 25 to 64 without kids can claim up to $632 for 2024.

Some states have also built a supplemental tax credit for individuals eligible for the federal EITC.

For example, Rhode Island became the first to create its own version of the earned income credit in 1986. To date, 31 states plus the District of Columbia and Puerto Rico offer EITC.

You can also claim local EITC in Montgomery County, Maryland, New York City, and San Francisco. According to the Institute on Taxation and Economic Policy (ITEP), around 700,000 households claimed the local level EITC.

Don’t miss the Child Tax Credit

The child tax credit (CTC), claimed by more than 46 million taxpayers each year, is a family tax break for parents and caregivers with dependent children under 17.

This year, you can get up to $2,000 per child. How much you’ll receive depends on your modified adjusted gross income (MAGI) and filing status. The refundable portion of the credit is worth up to $1,700.

Like the earned income tax credit, some states have enacted an additional child tax credit payment for households that are eligible for the federal credit.

For example, Minnesota offers the largest state child tax credit in the nation. For the 2023 tax year, more than 223,000 Minnesotan taxpayers claimed the tax break, which averaged $1,242. Eligible households may qualify for a tax credit worth up to $1,750 per qualifying child, with no limit on the number of children claimed.

So, make sure your state offers the child tax credit.

It’s worth noting that the federal child tax credit is slated to decrease by the end of 2025 due to sunsetting provisions of President Donald Trump’s Tax Cuts and Jobs Act (TCJA). The Republican-led Congress is drafting a comprehensive legislative package referred to as Trump’s ‘one big beautiful bill’ to expand this and other tax cuts.

If lawmakers fail to expand the TCJA in time, the child tax credit will drop to $1,000 per qualifying child.

Child and Dependent Care Tax Credit

The child and dependent care tax credit is a non-refundable tax break for working parents or caregivers. It’s also at risk of being repealed by the Republican-led Congress to help fund Trump’s proposed tax cuts.

Currently, the credit is worth 20% to 35% of qualifying expenses and is based on your adjusted gross income. The maximum amount of qualifying expenses you can claim for the 2024 tax year is:

• $3,000 for one qualifying person
• $6,000 for two or more qualifying dependents

There’s also a Credit for Other Dependents

If you don’t qualify for the federal child tax credit, you may be able to claim the Credit for Other Dependents. This credit can be claimed in addition to the Child and Dependent Care Credit and the EITC.

• The maximum credit amount is $500 for each qualifying dependent
• The credit phases out if the taxpayer’s income is more than $200,000 (single), or $400,000 (for couples filing jointly)

Worth noting: This tax credit was created as part of Trump’s Tax Cuts and Jobs Act of 2017 and is due to expire at the end of the year unless Congress extends the provision.

Tax breaks for college students

If you’re a student, taxes are likely the last thing on your mind. However, you could be missing out on education tax credits and deductions that can help you recover some of the expenses tied to your college costs.

This tax season may also be the last chance for you to claim popular tax breaks like the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC), as they are earmarked on the list of potential tax breaks on the GOP’s chopping block.

What are these tax credits good for?

• With the AOTC, eligible taxpayers (a student, parent, or spouse) can claim up to $2,500 in relief for qualified expenses. These may include tuition, fees, and necessary items such as books or supplies.
• The Lifetime Learning Credit is a tax credit that covers 20% of the first $10,000 of qualified education expenses, or a maximum of $2,000 per return. There’s no limit on the number of years you can claim this tax break.

You can still file for free

If you missed the April 15 tax deadline, don’t panic just yet. You can still file your tax return, and if you are due a refund, the IRS won’t penalize you for filing a late return.

You can also file for free directly with the IRS, but the clock is ticking.

• Taxpayers who have yet to file their 2024 tax return and earned $84,000 or less last year have until Oct. 15, 2025, to file with an IRS Free File partner.
• Qualified taxpayers in 25 states have until Oct. 20, 2025, to file with IRS Direct File.

In case you missed it, the Trump administration reportedly plans to eliminate the Direct File program. So, this could be your last opportunity to use the free filing program.

Related Content:

• What Happens If You Missed the Tax Deadline?
• States With 2025 IRS Tax Deadline Extensions
• 12 Education Tax Credits and Deductions to Know

Tax refunds aren’t free money — they’re your money. While most people use tax refunds to pay bills or build savings, there’s an overlooked strategy that could significantly boost your long-term wealth: investing your refund into a traditional IRA.

As CEO of PensionBee, I’ve seen how easy it is to put retirement savings on the back burner. But I’ve also seen how small, strategic decisions — such as using a tax refund to fund an IRA — can lead to a much stronger financial future.

This tax season, rethink what’s possible. Instead of spending your refund, make it work for your future.

A smarter strategy for your refund

The average tax refund this year, according to IRS data through March 7, is $3,324. Many see a high refund as a financial boost, but in reality, it’s money you overpaid throughout the year.

Ideally, you’d adjust your withholdings to keep more of your paycheck. Especially if it’s money you could use throughout the year to cover essential costs.

But if you do get a refund, the question is: What’s the smartest way to use it?

Insight into Americans’ use of their tax refunds typically reflects a desire to spend money on essentials like bills, groceries, savings and debt repayment. Only a few consider retirement — and that’s a missed opportunity.

A traditional IRA offers a unique tax advantage: Contributions lower your taxable income, reducing how much you owe and often increasing your refund. That means reinvesting your refund into your IRA creates a powerful cycle of tax savings and compounding growth.

How an IRA contribution saves you money today

Traditional IRAs aren’t just about your future security — they can put money back in your pocket now. Here’s how:

• Your employer withholds taxes based on estimated income, but IRA contributions throughout the year can change that calculation in your favor.
• This happens because IRA contributions reduce your taxable income, often leading to a lower tax bill or bigger refund.
• The IRS rewards retirement savers who use traditional IRAs with deductions that can drop your taxable income, helping you keep more of your hard-earned money.

By simply funding a traditional IRA, you create a tax benefit. Once you receive your tax refund … that’s when the real magic happens: You can reinvest it in your IRA. It’s here that you unlock the real potential of your money.

The power of compounding: Turn a refund into real wealth

Your traditional IRA is an investment vehicle for your personal retirement savings. At PensionBee, we make it easy for you to invest in your IRA by offering five simple portfolio options. Each is designed to benefit from long-term market gains.

Historically, the average rate of return for an IRA is about 5% without accounting for inflation. That’s where the real opportunity lies. It means that each year that you get a return on your initial investment, you also get a return on your return.

Over time, this creates exponential growth.

Here’s an example:

• If you contributed the average tax refund amount of $3,324 into an IRA today, assuming a standard 5% return (without inflation) and an average 0.85% management fee, it could grow 50% to $4,992 in just 10 years.
• In 15 years, you would have made nearly 85% of your original refund check, landing you at $6,117, and in 17 years, your money would double.
• In 25 years, you’d have $9,186.
• In 35 years, you’d have $13,795.

And that’s just one year’s refund. Imagine doing that every year. The impact could be game-changing.

Retirement security is financial security

America’s financial picture can appear stark. Millions of Americans supplement their income with high-interest debt. Nearly two-thirds of Americans feel like they live paycheck to paycheck — including high earners.

While many people understand the benefit of paying off credit card debt and building up emergency savings, few recognize the immediate impact of a retirement account on financial well-being.

However, the retirement picture is just as worrisome.

According to the Survey of Consumer Finances (SCF), roughly 1 in 2 households (46%) have no retirement savings at all. Worse, 7 in 10 American workers are not confident that they will be able to retire or retire on their chosen timeline.

Younger generations, struggling to cover day-to-day costs, have largely deprioritized retirement. For example, only 1 in 5 Gen Zers has started saving for retirement, while about the same percentage of them believe they’ll never retire.

Even though the retirement landscape is undoubtedly changing with discussions around Social Security legislation and the SECURE 2.0 Act, what hasn’t changed is the role of retirement accounts in securing broader financial prosperity.

Make your taxes work for you

A tax refund isn’t a windfall — it’s your money. Used wisely, it can be a powerful tool to build wealth. By contributing to an IRA, you power your tax bill today and set yourself up for a stronger financial future.

Instead of treating your refund as a bonus, think of it as an investment opportunity. Make this tax season the one where you take control of your retirement savings — and reap the benefits for decades to come.

Related Content

• IRS Income Tax Refund Schedule 2025: When Will Your Refund Arrive?
• Seven Ways to Spend Your Tax Refund
• Where's My Refund? How to Track Your Tax Refund Status
• Five Steps to Answer Your Million-Dollar Retirement Question
• How to Avoid These 10 Retirement Planning Mistakes

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

According to the IRS, the average tax refund filers will receive this season is $3,462. Sure, your financial adviser might tell you to squirrel it away in a high-yield CD or use it to boost your retirement portfolio.

That is sound advice, but sometimes you just need to splurge on something fun.

Whether you want to go big and spend the whole check on a dream vacation or just use a few hundred dollars to splurge while putting the rest of your tax refund toward a smart use, we say go for it.

Not sure where to start? We put together a few fun ideas on how to use your tax refund to treat yourself.

From booking a cruise or a resort stay to taking advantage of deals to stretch your shopping spree funds further, here are five treats to splurge on with your tax refund this year.

1. Go on a cruise

Cruises are one of the biggest travel trends of 2026, so if you haven’t been on one yet, maybe that refund check coming your way is your sign that it’s time to book a cruise.

Major cruise lines like Royal Caribbean International, Norwegian Cruise Line, and Celebrity Cruises are offering itineraries that span from the Caribbean to the Mediterranean.

Whether you're craving beach time, cultural excursions or just endless onboard entertainment, there’s a cruise out there that fits your tax refund budget.

Find short trips from under-$500 4-day jaunts to pricier amenities-packed cruises, and use your refund to dip your toes into the world of cruise vacations without dipping into your savings.

2. Book a relaxing resort stay

Take it easy for a weekend (or longer) at a luxurious resort with stunning waterfront views. Whether you want to be pampered with an all-inclusive stay or relax on a budget, there are tons of popular resorts at destinations all over the world.

If true relaxation is the goal, consider an adults-only resort that caters specifically to quiet getaways, wellness experiences or romantic escapes.

Many offer spa treatments, private beaches, and fine dining in a peaceful, kid-free setting — no cannonballs at the pool, just cocktails and ocean breezes.

3. Upgrade your luggage by taking advantage of deals

Use your tax refund to upgrade your luggage ahead of your next vacation.

There are some tough-to-beat deals on Samsonite, Delsey Paris and other premium luggage brands right now.

For example, you can get a three-piece set of Samsonite hard shell luggage for $310 (40% off) right now. Don't need a full set? The stylish Samsonite Voltage DLX carry-on is 29% off right now.

4. Get the golf clubs Rory McIlroy used to win the Masters

If you were on the edge of your seat as Rory McIlroy won his second green jacket in a row at the 2026 Masters, why not add one or more of his game-winning clubs to your bag next time you head to the golf course?

Just like last year, Rory stocked his bag with Taylormade ahead of his trip to Augusta. the TaylorMade Qi4D driver ($650) helped him nab birdies at No. 7, 8 and 13. On the greens, he wielded a TaylorMade Spider Tour X X3 mallet ($350).

5. Score some under-$500 tech deals and stash the rest of your refund in savings

Don’t want to spend your entire tax refund on a shopping spree? You can still use a portion of it to treat yourself to something fun.

As long as you put most of it into a high-yield savings account or short-term CD, it still counts as financially responsible even if you spent a few hundred on wish list items – especially if you can score a great deal.

To get you inspired, here are some cool under-$500 splurges that won’t blow through your entire tax refund:

• Samsung - 65" Class U7900 Series Smart TV, $330 (Save 29%)
• Apple AirPods Pro 3, $200 (Save $50)
• Bose QuietComfort Wireless Noise Cancelling Over-the-Ear Headphones, $199 (Save 44%)
• Apple Watch Series 11 (GPS), $299 (Save $100)
• Garmin Forerunner 265S GPS Smartwatch, $350 (Save $100)
• Ray-Ban Meta Wayfarer (Gen1) Smart Glasses, $225 (Save $75)

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• What To Take on a Plane for a More Comfortable Trip
• Eight Family Vacation Ideas for Any Budget
• Amazon Haul Online Is Here – Shop Under $20 Deals Without the App

Editor’s note: This is part one of a four-part series exploring financial fact vs fiction. Each article will examine five of the top 20 most common financial myths — from investments to retirement and Social Security to life insurance.

How do most people learn the basics of finance?

Since several states are only now starting to require mandatory financial education, many American adults have learned about budgeting, saving, investing and taxes either by trial and error or by listening to advice from friends and family.

While Uncle Fred or Aunt Sally may have the best of intentions, the financial aphorisms of the past — “a penny saved is a penny earned” — don’t always ring true, or are at least due for an update (after all, pennies are about to go the way of the dodo).

To help you decipher financial fact from fiction, I’m putting together a series of articles about the top 20 most common financial myths, addressing everything from investments to retirement and Social Security to life insurance.

Here are the first five:

1. Paying off a 5% mortgage is equivalent to buying a 5% annual-return investment product

Some people who come into an unexpected windfall may be tempted to pay off the remainder of their mortgage, thinking they’ll save 5% per year on interest.

But because of the way mortgages work — with most people paying a larger share of interest at the beginning of the loan period — a homeowner with 10 years left on a 30-year mortgage won’t realize 5% in annual return savings. It may be only 2% or 3% savings.

Before you use a lump sum to pay off a mortgage, consider two issues: financial flexibility and risk.

If you use a large sum of money to pay off a loan, you may not have cash reserves for an unexpected situation such as a health scare or furnace replacement. How important is financial flexibility to you?

Conversely, since paying off a mortgage at whatever interest rate saves money, it’s important to think about an investment’s risk profile when comparing.

Unless you’re putting the money into a certificate of deposit (CD) or a money market account, you will potentially be taking on more risk than paying off a loan.

2. Doing a Roth IRA conversion from a traditional IRA reduces taxes and saves money

With traditional IRAs, contributions are tax-deductible, meaning you can deduct the contribution from your income when filing taxes, but when IRA distributions are eventually taken out during retirement, they’re taxed as ordinary income.

Roth IRAs flip the equation, with contributions being made after-tax (i.e., no deduction), but distributions coming out tax-free in retirement, as long as you’re at least 59½ years old and your Roth IRA was put in place five or more years ago.

When you convert a traditional IRA to a Roth IRA, you might be able to save money on future taxes. But you might not.

Unless you have a pile of cash sitting around to pay the tax bill, which is due when you complete the Roth conversion, you’ll have to use traditional IRA distributions, which means you pay taxes on the amount distributed and, possibly, an early-withdrawal penalty, and thus can expect to get only about 50 cents to 70 cents on the dollar.

That’s not to say it never makes sense to convert to a Roth IRA. There are two factors to consider: age and income.

If you’re only 30 years old and have 50 more years to earn compound interest, it might make sense, especially if you aren’t currently in a high tax bracket.

But most people consider doing a conversion only in their 50s and 60s, as they approach retirement, when they don’t have as many years to accrue interest to offset the taxes they’ll be paying now to convert to a Roth IRA.

Additionally, if there is a gap in your income, and it goes down for a few years, that might also be a good time since you’ll pay less in taxes to convert.

Conversely, a person in their prime earning years will probably want to lower their taxable income now, so it’s smarter to use a traditional IRA to reduce your taxes.

Ultimately, a dollar is always worth more now than in the future. And since we don’t know if taxes will go up or down tomorrow, it may not be such a good idea to pre-pay income taxes to the government.

3. Social Security is going bankrupt or becoming insolvent, and I don't expect to collect any benefits

Social Security is a pay-as-you-go system, which means that self-employment and FICA payroll taxes go directly to pay beneficiaries, with any surplus going to savings.

The discussion around Social Security being bankrupt or insolvent refers to the Old-Age and Survivors Insurance (OASI) Trust Fund. For decades, when Baby Boomers were working, a surplus went into this Social Security trust fund.

But now that the Boomer generation is retiring, and the birthrate is lower, there are a lot fewer workers, so we’re burning through the trust fund.

Current estimates indicate we’ll exhaust the trust fund in 2033. Does that mean retirees won’t be able to collect? The answer is no.

If the Social Security trust fund runs out and Congress doesn’t act, projections show that beneficiaries will still get about 80% of benefits, because there is expected to be enough coming in to pay the bulk of benefits.

Of course, the federal government can also fortify the trust fund by raising the wage base limit, increasing self-employment and FICA taxes or pushing the full retirement age forward.

4. Withdrawing 4% of your retirement savings ensures that you won't run out of money before you die

What many refer to as the 4% rule isn’t so much a rule as it is a rule of thumb. In 1994, financial adviser William Bengen coined the phrase “the 4% rule,” theorizing that if you have a 50%-50% stock-bond portfolio and take out 4% in the first year, you can increase the amount to match the rate of inflation and won’t likely run out of money before dying.

Does Bengen’s rule still hold true? It’s safe to say it’s outdated.

The 4% rule assumes that stock and bond returns will be similar to long-term averages, which may or may not hold true.

In fact, many hypothesize that the next decade will produce below-average U.S. stock market returns due to the past two years of substantial outperformance, with the S&P 500 returning 23.3% in 2024 and 24.3% in 2023.

Bond returns may also be less robust than during Bengen’s time, because the 50-year U.S. bond bull market, largely driven by a secular period of falling interest rates, has now ended.

Beyond market returns and volatility, the 4% rule assumed that people would live only 25 to 30 years in retirement. Today, people might have 40 to 45 years in retirement, and the 4% rule isn’t designed to cover that scenario.

Another limitation to the 4% rule is spending variability. During retirement, most retiree spending varies significantly from year to year, which can meaningfully reduce how long their savings will last.

If you want to make sure you have enough money to last in retirement, the best thing to do is to speak to a financial adviser who can help develop a plan based on your specific situation.

5. It's better to get a tax refund than owe taxes to the IRS

People like to get tax refunds. But getting a refund just means that you’ve given the government an interest-free loan.

Ideally, your payroll-tax withholdings should be close to what you’ll owe in taxes. No more, no less. Getting a tax refund may feel good, but it’s even better to earn 4% interest throughout the year.

While some basics stay in style forever, finances aren’t one of them. It’s a good idea to revisit the “golden rules” of money and finances to stay up to date for a modern generation. Otherwise, you could be making costly mistakes.

Related Content

• Seven Biggest Financial Planning Myths: How Many Do You Believe?
• Five Retirement Myths vs the Reality
• Four Social Security Myths Debunked
• Ignoring Your Old 401(k) Could Be a $130,000 Mistake
• IRA vs Roth vs 401(k): Which Do You Pick?

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

If you feel less than enthusiastic about filing your federal income taxes this year, you're not alone. IRS filing data and a recent survey shed light on a growing trend: Many are hesitant to file taxes in 2025.

Ths tax season, the IRS has reported a notable downturn in tax return submissions compared to previous years.

Why? Possible reasons range from concerns about IRS workforce reductions to general economic uncertainty.

A March survey of 1,003 respondents conducted by Qualtrics on behalf of Intuit Credit Karma also revealed some interesting data points. Nearly a quarter of respondents felt less concerned about making errors on their tax returns this year, while almost half worried about receiving a timely refund.

Meanwhile, according to the survey, 17% of millennials have contemplated not filing at all. They reported a belief that audit risk has decreased due to recent downsizing at the IRS.

So, what does all of this mean for you? Here’s more to know.

Filing taxes 2025: Slowdown at the IRS

Since the start of the 2025 tax filing season on January 27, the number of returns processed by the IRS has fallen by 1.7% ( just over 1.2 million returns) compared to the same period in 2024.

That decline comes despite an average increase in refund amounts and suggests that significantly fewer taxpayers are filing early this year — or at all.

According to Bloomberg (paywall), former IRS Commissioner Charles Retitig relayed the following: “I know thousands of accountants, tax professionals, tax return preparers — and they’re all getting the question, ‘Why should I file my taxes? Why should I pay my taxes? My understanding is the IRS is going to be abolished.”

The impact? The IRS reportedly anticipates a $500 billion decrease in tax revenue this year. (That’s a more than 10% decline compared to last year.) That projected revenue loss is particularly striking compared to the $5.1 trillion collected by the IRS in 2024.

Some attribute the estimated shortfall to widespread disruptions caused by staff reductions and operational changes initiated by the Trump administration’s Department of Government Efficiency (DOGE), led by Elon Musk of Tesla and SpaceX.

Here’s what’s been happening that could be contributing to the tax-filing hesitancy this tax season.

DOGE IRS workforce cuts

As Kiplinger has reported, Trump’s DOGE has implemented substantial budget cuts at the IRS, resulting in significant staff reductions. Some say the cuts have impacted the tax agency's ability to process returns efficiently and enforce compliance.

For more information, see IRS Layoffs Cause Doubt, Fear This Tax Season.

As mentioned, reports also suggest the IRS could face a potential revenue drop of as much as half a billion dollars due to some taxpayers betting on the tax agency's diminished audit capabilities.

Some experts caution that, going forward, these cuts could severely hamper the IRS's functionality, weaken the government's ability to collect taxes effectively, and lead to processing delays.

Other things to keep in mind:

• Republican lawmakers have proposed abolishing the tax agency. Trump has floated the idea of replacing the IRS with an ERS (External Revenue Service) and eliminating income taxes in favor of tariffs.
• Trump’s pick for IRS Commissioner, former congressman and auctioneer Billy Long, still hasn’t been Senate-confirmed.

Egg prices and economic uncertainty: Recession ahead?

Beyond IRS-specific issues, many people in the U.S. are grappling with significant economic challenges, including inflation, low or stagnating wages, and rising costs.

For instance, egg prices have soared to $10 or more per dozen in some areas, and consumer confidence is down. Additionally, economic uncertainty in 2025 has intensified partly due to President Donald Trump's tariff policies.

Many experts warn that tariffs (i.e., taxes on imports that often impact consumer prices) could slow economic growth and increase recession risks. Some point to tariffs as a major factor behind reduced spending and consumer pessimism.

Though it’s worth noting that some U.S. economic forecasts remain optimistic.

Meanwhile, additional surveys find many taxpayers are simply overwhelmed when it comes to filing taxes. The tax code and tax filing process can be incredibly complicated.

Additionally, many who rely on tax refunds to pay bills or purchase essentials worry their refunds will be delayed. Data show that most people use their tax refunds for practical purposes. As of March 17, the average IRS tax refund is $3,271..

• Reportedly, 49% of taxpayers will use their refund to “make ends meet,” about 25% of taxpayers plan to deposit their refunds into a savings account, while 35% intend to use their refunds to pay down debt.
• Other common uses include replenishing emergency funds, boosting retirement savings, and investing in education or home improvements.

IRS audit risk?

Fewer IRS workers focusing on tax compliance is leading some taxpayers to consider taking risks with their returns that they might usually avoid.

According to the Credit Karma survey, millennials are at the forefront of this trend. A notable percentage indicated they might not file taxes this year due to a perceived lower chance of being audited. Nearly half of the surveyed taxpayers doubted the federal tax agency's capacity to double-check filings.

Those findings reflect a broader lack of confidence in the IRS' ability to enforce compliance effectively without a Senate-confirmed Commissioner and with much of its staff already let go or on its way out the door soon.

Can you not file taxes?

Despite these issues and real concerns, most experts caution against failing to file or pay taxes. There are several consequences of not filing or paying.

Financial Penalties: The IRS imposes significant penalties for failing to file or pay taxes. These can include a percentage of unpaid taxes for each month the return is late. There are also penalties for failing to pay, which can increase if the IRS issues a notice of intent to levy.

Even if you owe a relatively small amount, penalties can add up. Interest also accrues daily on unpaid balances annually, compounding the financial burden over time.

Legal Consequences: Tax evasion, which involves deliberately avoiding paying taxes, carries legal risks. It can also result in hefty fines for individuals and businesses, potential prison time, and additional penalties for negligence or underreporting income.

In extreme cases, as Kiplinger has reported, the IRS can revoke passports for individuals with significant unpaid tax debts exceeding a certain threshold.

Other Enforcement Actions: The IRS has various tools to recover unpaid taxes. These include wage garnishment, bank levies, and filing a Substitute for Return (SFR), where the IRS files a return on your behalf based on available data, often resulting in higher tax liabilities.

Filing taxes: Bottom line

For those struggling financially or feeling overwhelmed by their tax obligations, experts recommend exploring options for paying the IRS if you owe like repayment plans or filing extensions, rather than avoiding filing altogether.

And concerning common tax filing mistakes, some experts note that human beings aren’t necessarily the ones who will catch errors on “average taxpayer” returns.

The agency may rely more on automated software to uncover unpaid taxes or filing errors and focus on what some experts have described to Kiplingers as “low hanging fruit,” i.e., Individuals behind on their taxes, non-filers, or taxpayers on repayment plans.

For those daunted by this year's tax season, consult a trusted and qualified tax preparer or financial planner who can help you through the process and ensure compliance with current tax laws.

Related

• What's Wrong With Trump's Plan to Abolish the IRS
• Five Scary Things the IRS Can Do If You Owe Back Taxes
• Tax Season 2025: IRS Changes to Know Before You File

President Donald Trump recently signed an executive order calling on the federal government to phase out the use of paper checks and switch to electronic payments by September 30, with some limited exceptions.

The U.S. Treasury now has approximately six months to phase out paper checks for various purposes, including tax refunds and Social Security payments.

According to the White House, the Trump administration aims to “modernize how the government handles money, switching from old-fashioned paper-based payments to fast, secure electronic payments.”

In other words, all government departments and agencies must issue disbursements via electronic funds transfer (EFT) methods, like direct deposit, debit/credit card payments, digital wallets, and real-time transfers.

Payments made to the federal government, like taxes, fees, fines, or loans, will also have to be made electronically, with limited exceptions.

As noted, exceptions are supposed to be made for individuals who don’t have access to banking services, or for certain special cases, such as emergency payments. Treasury Secretary Scott Bessent must provide an implementation plan for the measures within 180 days, according to Trump’s directive.

“Paper-based payments, such as checks and money orders, impose unnecessary costs, delays, and risks of fraud, lost payments, theft, and inefficiencies,” the White House order published March 25 stated. “Digital payments are more efficient, less costly, and less vulnerable to fraud.”

What does this mean for you? Here's more of what you need to know.

Related: Check out Kiplinger's tax blog for the 2025 filing season. We're providing live updates, news, information, and commentary to help you navigate your taxes.

Social Security checks no more?

The Treasury's elimination of paper checks for Social Security payments will require those receiving benefits by check to transition to electronic payment methods, like direct deposit or prepaid debit cards. Data show that more than 450,000 individuals receive paper Social Security checks.

• This change could pose challenges, particularly for those older adults who are less familiar with digital banking systems.
• Vulnerable populations, including those without reliable internet access, may also face difficulties adapting to the new system.
• Though, as mentioned, the order provides for a process to be developed to address some cases of undue hardship.

Additionally, the transition could strain Social Security Administration resources as recipients seek assistance updating their payment information.

Many individuals who are unable to make changes online will require in-person support. That will be challenging, given the Trump administration's cuts to the federal agency, including the closure of many Social Security local offices.

We'll have to wait and see how the order is implemented and what types of safeguards and processes will be put in place to address these and other concerns.

Cracking down on mail theft

Notably, the Trump administration's move to phase out paper checks comes as more taxpayers have fallen victim to mail theft in recent years.

As reported by Kiplinger, last summer, two former postal workers were charged with stealing more than $4 million in U.S. Treasury checks at the John F. Kennedy International Airport between June 2021 and August 2023. The checks included Social Security benefits, pandemic stimulus checks, and tax refunds.

Mail theft cases like that are just the tip of the iceberg.

The FBI and United States Postal Inspection Service (USPIS) warned that check fraud is growing more common, particularly via mail theft. Cases involving fraudsters have nearly doubled from 2021 to 2023, harming businesses, consumers, and government entities.

The top five reasons you can fall victim to mail theft include the following:

1. Checks left in residential mailboxes overnight

2. Checks placed in blue collection boxes after the last pickup

3. Break-ins at USPS facilities

4. Postal service employees are getting robbed

5. Bribery and collusion of USPS employees

How bad has mail theft gotten? The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) reported in September that mail theft-related check fraud totaled more than $688 million between February 2023 and August 2023.

FinCen’s analysis of the 15,417 reports related to check fraud identified three outcomes. Some 44% of stolen checks were altered and then deposited, 26% were used as templates for counterfeit checks, and 20% were fraudulently signed and deposited.

Lawmakers also tackle mail fraud

Last month, several bipartisan measures targeting taxpayer refunds, rights, and protections moved one step further on Capitol Hill.

As reported by Kiplinger, one piece of legislation specifically aims to reduce the risk of IRS tax refund mail theft by giving taxpayers the option to request a direct deposit if their check is stolen.

Congresswoman Nicole Malliotakis (R-NY) introduced a bipartisan measure, the Recovery of Stolen Checks Act, alongside Reps. David Kustoff (R-TN) and Terri Sewell (D-AL).

“Many of my constituents are hardworking taxpayers and when a check goes missing or is stolen, it directly impacts their livelihood,” said Malliotakis. “Having reissued payments delivered via direct deposit is a commonsense solution to this systematic and widespread problem, and will prevent criminals from preying on taxpayers and stealing their hard-earned money.”

Malliotakis’ district has faced a spike in mail fraud cases, with at least $5.3 million in checks stolen across 377 cases as of Feb. 12, 2025. Check amounts ranged from a few hundred dollars up to $500,000. One constituent had their check reissued four times until it was successfully received.

Tax refund check: What you can do today

With tax season underway, the best action you can take to minimize the risk of mail fraud is to file your tax return electronically and request direct deposit.

Taxpayers who file electronically can use the ‘Where’s My Refund’ tool to check the status of their tax refund within 24 hours of filing. If you’ve filed a paper return, you can track your refund within four weeks.

However, as of March 14, 2025, the IRS issued approximately 49.8 million tax refunds. Of these, approximately 1.5 million refunds were issued as paper checks, reflecting the difference between total refunds and direct deposits.

So, if you’re concerned that your refund is delayed or may have been stolen, you can also request a refund trace directly with the IRS via the ‘Where’s My Refund’ tool, by calling the agency’s automated system, or by contacting a customer service representative at 800-829-1040.

There’s one exception: Those filing jointly won’t be able to initiate a refund trace through the automated system and may be asked to complete a Form 3911, Taxpayer Statement Regarding Refund, to start the process.

Keep in mind that some federal refunds may take longer to process. You can refer to Kiplinger’s tax refund calendar to determine when you may expect your mailed check or direct deposit.

Additionally, if the tax refund or check you suspect was stolen, lost, or destroyed is from a state program, you should report your case to your State Comptroller’s Office.

Related Content

• Mail Theft Crisis: Why Your IRS Tax Refund Is At Risk
• Legislation Cracking Down on IRS Tax Refund Mail Theft Advances
• Tax Season 2025 Is Here: Key IRS Changes to Know Before You File
• What's Happening With Trump's Tariffs?

The IRS is reportedly preparing to reduce its nearly 100,000 workforce by as much as half through layoffs, buyouts, and attrition — and experts say the disruption is already interfering with this tax season.

Close to 7,000 probationary employees were laid off on February 20, and now the agency is reinstating and placing those workers on paid administrative leave until further notice. That figure adds to about 5,000 IRS employees who have reportedly accepted the Trump administration’s fork-in-the-road deferred resignation offer to cut down federal spending.

As reported by Kiplinger, those deemed critical to the 2025 tax season have been barred from accepting the buyout until mid-May, after the tax filing deadline.

Now, more layoffs could be on the horizon, as Elon Musk’s Department of Government Efficiency (DOGE) plans to cut as much as 20% of the IRS by mid-May. The billionaire tasked by President Donald Trump to dismantle federal agencies and other spending expects to eliminate about 6,800 more federal workers, barely a month after tax season ends.

The dramatic downsizing could worsen as the IRS is drafting plans to eliminate up to 45,000 of its overall headcount, sources familiar with the matter told the Associated Press. With the 2025 tax season underway, tax experts have noticed signs of trouble at the IRS, from a lack of customer service and delays to audit errors.

Here’s what you need to know about how IRS layoffs can impact you as a taxpayer, based on Kiplinger’s conversations with CPAs and tax experts.

Contacting IRS: ‘Revenue officers becoming a black hole’

When tax season rolls around, the saying “all hands on deck” is not lost at the IRS. The agency has been operating with that approach for years to overcome staffing shortages and successfully process millions of tax returns.

In fact, the IRS has been known to siphon employees from other departments to meet tax filing deadlines in previous years. This year is no different. According to the National Taxpayer Advocate, the agency made the business call to temporarily direct staffers from the Identity Theft Victim Assistance (IDTVA) department to answer phones in Taxpayer Services to handle the high volume of calls during tax season.

As reported by Kiplinger, Taxpayer Services accounts for half of the IRS entire workforce. The agency’s overall headcount had surpassed 100,000 by January, a staffing milestone not seen in 30 years.

But that progress has fallen back in barely two months.

With the recent wave of layoffs shaking up the IRS, some impacted employees likely belonged to the IDTVA. Between fiscal years 2023 and 2024, the department hired 663 new employees. Musk’s firings on February 20 mostly impacted probationary workers who had fewer protections compared to long-term colleagues, which may have included some of those recent hires.

Industry experts across the country have already noticed that it’s getting harder to reach an IRS agent on the phone, putting their clients' tax returns and problems inevitably on hold.

“Typically, when we work a high-value collections case, we are working with a single point of contact for our clients’ case at the IRS known as a revenue officer,” Logan Allec, CPA and owner of tax relief company Choice Tax Relief, told Kiplinger. “All information is passed to, and negotiations done with, this particular individual.”

But what happens when IRS phone lines go unanswered? That’s a question many CPAs and taxpayers are asking themselves this year.

Harder to avoid tax penalties

With fewer employees at the IRS, taxpayers are likely to face more obstacles as they attempt to get their problems solved.

The National Taxpayer Advocate pointed to hiring as one of the IRS's most serious problems in its annual report to Congress this year. The government watchdog wrote that insufficient funding in the IRS and low staffing levels over the past decade have forced taxpayers to deal with:

• Delays in processing returns and refunds
• Reduced access to knowledgeable IRS employees
• Inconsistent application of tax laws and increasing errors

The sudden reduction in IRS staff has sounded alarm bells for one attorney in Michigan, particularly regarding its impact on taxpayers.

“Fewer IRS employees create a big problem for taxpayers when it comes to getting their tax issues resolved,” Stephen Weisberg, principal attorney and founder of The W Tax Group, told Kiplinger. “Tax debt resolutions, including payment plans, Offers in Compromise, levy and lien releases, will take longer, that is, assuming you can get in touch with someone to help you.”

As reported by Kiplinger, only 32% of callers reached an IRS employee last year during tax season, and 29% of callers were able to speak with an employee during the full year. While that is an improvement from previous years, it still required reassigning employees from other departments to assist with phone calls.

“The IRS is already overwhelmed,” Weisberg added. “With even fewer employees, there’s going to be no one to help taxpayers resolve these issues. Penalties will still accrue, as will interest, despite the fact that taxpayers won’t be able to get in contact with anyone in order to resolve their tax debt.”

‘Slow processing and refunds’

Taxpayers, particularly those with more complicated tax returns, often worry about delays.

Those concerns are within reason. It took the IRS an average of 180 days to manually process tax returns last year. Processing paper returns took an average of 20 days, instead of 13. Additionally, 66% of taxpayer mail was delayed and considered late by the end of 2024, according to the NTA.

If you were a victim of identity theft, the average time to reach a resolution and process refunds was nearly two years. Not to mention, the agency still faced a backlog of 1.2 million Employee Retention Credit (ERC) claims as of last fall.

The Trump administration’s hiring freeze and efforts to downsize the IRS are expected to aggravate existing problems. Mainly, ones that will impact your tax experience.

Slow processing will not only hurt responsible taxpayers it would also increase the national deficit if the IRS no longer has the bandwidth to target complicated returns, such as large corporations and higher earners.

A separate study from Yale Budget Lab shows that if the IRS shrinks by 50% — equal to a workforce reduction of about 50,000 people — the agency won’t be able to collect revenues, resulting in as much as $395 billion ($350 billion net) forgone revenue over 10 years. If the staffing reduction leads to an increase in taxpayer noncompliance, revenue losses could rise as high as $2.4 trillion in a decade.

“These layoffs within the IRS could slow processing and refunds; especially more complicated returns,” Thomas J. Cryan, attorney and author of Disrupting Taxes told Kiplinger. “Of greater impact, one can estimate that the reduction in the IRS workforce will undermine and reduce tax revenue collections; which will have the knock-on effect of increasing the annual budget deficit, which in turn will increase the costs of interest on the debt to the citizens.”

‘A focus on low-hanging fruit’

The recent string of IRS layoffs spearheaded by Musk’s DOGE team reportedly impacted thousands of employees who worked in taxpayer compliance, call centers, and the agency’s technology modernization.

While those estimated 7,000 probationary agency workers were recently placed on paid leave until further notice, they are not allowed to work during this tax season. In a letter to Acting IRS Commissioner Melanie Krause, 130 House Democrats warned that the loss of thousands in compliance staff “could cripple progress” and “embolden tax evasion” which would deprive the U.S. of urgently needed resources.

“Unfortunately, to make up for the lost revenue from experienced auditors leaving the agency, we will likely see more of a focus on low-hanging fruit,” Allec told Kiplinger, explaining that these are “less sophisticated and often non-represented taxpayers whom the IRS can essentially railroad in an audit or collections case.”

Some examples of low-hanging fruit where the IRS may focus enforcement efforts on include:

• Individuals behind on their taxes, or non-filers
• Taxpayers on repayment plans

According to Allec, the IRS has a system called Automated Substitute for Return (ASFR), which can calculate a taxpayer's liability. With less staffing, the IRS would have to lean on this automated software to pull in revenue.

“If we see more layoffs at the IRS, I have to believe that more resources will be allocated to the ‘automated’ programs,” he added.

Karla Dennis, an enrolled tax agent and CEO of KDA, Inc. told Kiplinger that the loss of compliance workers could mean fewer audits across the business sector and the wealthy. That’s because more complicated casework often requires a manual review by the IRS and can’t be run through a software service.

“The IRS compliance sector is divided between processing returns and conducting audits,” Dennis said. “Since layoffs seem to be targeting auditors, we can expect a decrease in audits, especially those for small businesses.”

What’s next for the IRS

The IRS workforce could face more shakeups as the Trump administration pushes its goal to reduce federal spending.

To date, the agency has yet to confirm President Trump’s choice for commissioner — ex-congressman and auctioneer Billy Long (R-Missouri). The IRS also demoted the acting chief counsel, William Paul. His position was filled by another IRS attorney Andrew De Mello, who sources say supports DOGE.

Looking toward the future, Trump has suggested abolishing the IRS and replacing the agency with a tariff-led revenue system administered by a so-called External Revenue Service.

However, one fact is for certain: the recent layoffs at the IRS will cause some strain on taxpayers.

"In the short term, most likely it will cause some issues, but the goal is to shake things up and make things more efficient over time,” CFP and tax strategist Matt Chancey told Kiplinger. “No one thinks that agency is efficient today, so it makes sense.”

Chancey, founder of Tax Alpha Title, cited a potential positive: “Will it get worse before it gets better? Most likely. But with new technology and some AI integration and being forced to become more efficient it should get better over time. What is the old expression — you have to break a few eggs to make an omelette."

Related Content:

• IRS Shakeup: What Trump’s Commissioner Pick Could Mean for Your Taxes
• No New IRS Agents? What Trump’s Federal Hiring Freeze, Firings Means for Your Taxes
• Could ERC Delays Get Worse if Trump Downsizes the IRS?

If you're receiving a tax refund this year, you might wonder what to do with it. A large purchase? Vacation? Splurging could be tempting, but there are other ways you can benefit your finances.

While there's much uncertainty surrounding the economy, thanks in large part to whether some tariffs will be implemented or not, one group that benefits from that uncertainty is savers.

At their March meeting, the Federal Reserve declined to cut interest rates. This gives savers a longer runway to earn a healthy rate of return. So, if Uncle Sam owes you money this year, one place to consider parking it is a high-yield savings account.

Grow your tax refund with a high-yield savings account

A high-yield savings account allows you to store your money away for as long as you would like. Unlike certificate of deposits which have terms attached, a high-yield savings account gives you the flexibility to grow your money with quick access to it anytime you need it.

When searching for the best options, online banks are a great first place to turn to. They'll offer much higher rates than brick-and-mortar location because they don't have the overhead expenses associated with physical locations.

Using this tool from Bankrate, you can see how good the rates currently are:

Things to consider with a high-yield savings account

These accounts come with variable interest rates. It means if the Federal Reserve decides to cut interest rates in the future, and there might be two rate cuts this year, savings accounts can dip.

The good news is even if that happens, you'll have the ability to withdrawal your money and find another savings or investment vehicle that works better for your goals.

The other thing to watch out for is fees. Some banks require you maintain a specific balance. Failure to do so could result in monthly fees which will likely offset any interest earnings.

10 best high-yield savings accounts to consider

Once you receive your refund, here are 10 savings accounts that offer rates above 4%:

To open a high-yield savings account, you'll need to visit a local branch or fill out an application with an online bank. As part of opening the account, supply basic information, such as your address, Social Security number and a government-issued ID. This can be a driver's license, state ID, passport or other approved documents from your bank.

If you open a high-yield savings account online, you can do a transfer from your checking account to your new savings account to fund it securely. The process is quick and only takes a few business days, in most cases, to complete.

How much can I earn?

It depends on how much you deposit and the interest rate your savings account offers.

For example, the IRS reported the average tax refund this year is $2,252. If you put $2,000 of your tax refund into a high-yield savings account with a 4.30% APY — like the one currently offered by Western Alliance Bank— you would earn approximately $87.89 in interest over the course of a year. This assumes the rate remains steady and you don’t add or withdraw any money during that time.

That’s nearly $90 in passive income just for letting your refund sit in the right account. Keep in mind that HYSA rates can fluctuate, and the way interest is compounded — daily, monthly, or quarterly — can also slightly impact your total earnings.

The bottom line

If you're receiving a tax refund this year, one smart place to put it is in a high-yield savings account. With it, you'll earn a rate that outpaces inflation, while also giving you quick access to your money anytime you need it.

Whether you have short-term or long-term savings goals, it's among the easier ways to reach them. And stay tuned to Fed news, as future rate cuts could influence earnings.

Related content

• Still Need to File Your Taxes? Here's the Best Tax Prep Software
• After the Fed Meeting, These 7 High-Yield Savings Accounts are Worth It
• 2025 IRS Tax Refund Schedule: When Will Your Refund Arrive?
• Places to Store and Grow Your Cash in 2025

Idaho parents with children enrolled in a private or homeschool may be eligible for a new refundable tax credit.

Idaho Gov. Brad Little signed the Parental Choice Tax Credit program into law on Feb. 28, which would provide up to $5,000 per K-12 student for certain expenses related to the education, including tuition and fees for enrollment. For tax year 2025 and subsequent years, families with children aged 5 to 21 with disabilities would be eligible for up to $7,500.

The $50 million measure is designed to provide “even more abundant schooling options for Idaho students and families,” Little said in a press release, adding that the state recently contributed close to $17 billion into its K-12 public school system and increased public funding approximately 60% in the last few years.

“Idaho can have it all – strong public schools AND education freedom,” added Little.

The bill passed in a Senate vote of 20-15, despite facing a flood of opposition from public school advocates and government officials.

Of note, President Donald Trump endorsed the measure saying it would provide the “very best education for their child.”

Some opponents raised concerns that subsidizing private schooling would impact public school funding in rural areas, while others argue it is unconstitutional because it supports directing taxpayer money to religious schools.

Here’s what you need to know about Idaho’s first educational choice program.

Parental Choice Tax Credit: Who's eligible?

All Idaho residents between the ages of five and 18 can participate in the Parental Choice Tax Credit program. Students who have a disability are eligible through age 21.

• For tax year 2025, the program will prioritize applicants with a modified gross income at or below 300% of the federal poverty level — $93,600 annually for a family of four.
• In 2027, priority will be given to parents who received the credit in the first two years of the program, followed by applicants with incomes below the mentioned threshold.

Does that mean there’s an income limit? No, there is no income limit to claim this credit. Only that priority will be given first to applicants at or under 300% of the federal poverty line.

Your child doesn’t have to be a former public school student to be able to apply for this credit, either.

What expenses will the credit cover?

Idaho’s Parental Choice Tax Credit will cover out-of-pocket qualifying expenses related to your child’s education in a non-public school. Specifically, these expenses include tuition and fees for enrollment at a private school, microschool, or learning pod — also known as homeschooling.

Academic instruction may be given in person, online, virtually, or via a combination of all the mentioned options, according to the legislation.

Other eligible expenses include:

• Tutoring
• National standardized test assessments
• Assessments used to determine college admission
• Industry-recognized certification exams
• Preparatory courses for standardized assessments, also known as “college-prep”

It also includes the cost of textbooks, curricula, and transportation to a private school, microschool, or learning pod. For tuition and fees to qualify, the school must be accredited or a parent must provide evidence of the child’s academic progress. This includes proof that the child is being taught in English language arts, mathematics, science, and social studies.

As noted, parents cannot claim the credit for any semester in which their child was enrolled full-time or part-time in a public school, public charter school, public virtual charter school, public magnet school, or part-time public kindergarten.

Are applications open?

The application period for Idaho’s latest education tax credit is projected to open January 15, 2026.

To apply, you must have claimed each eligible student as a dependent on your state individual income tax return. You must also be the only parent claiming the credit for the child.

At the time of applying, parents or guardians may opt to receive a one-time advanced payment for the refundable credit per eligible student. The payment will be delivered within 60 days, according to government officials.

As mentioned, priority will be given to applicants with an adjusted gross income at or below 300% of the federal poverty level.

Education leaders say the move is “anti-public school”

The Idaho Education Association, the state’s teachers union, characterized the measure as a push by “anti-public school” lawmakers.

IEA members and other pro-public school education voters sent thousands of emails and letters in opposition of the bill, now turned law, that gives a tax credit to parents of private school students.

Local reports reveal that before the bill was introduced, Idaho's House Revenue and Taxation Committee had received more than 1,000 emails, with 94% opposing the voucher program.

In short, the measure is taxpayer money directed toward private schools.

“Voucher proponents—eager to help out-of-state billionaires plunder Idaho's public school budget—are already planning how to exploit and expand this program during 2026's legislative session,” IEA President Layne McInelly said in a statement. “Each year, they will try to siphon more and more tax dollars away from public schools as a gift to private and religious schools and their patrons.”

Sen. Kevin Cook (R-Idaho Falls), who serves on the Senate Local Government and Taxation Committee, said the funding system for the credit may likely impact more than education.

“When somebody says it won’t affect public schools— it will affect everything,” Cook said. “It will affect your roads, your schools, your bridges, everything that we do here at the State of Idaho. It will affect (it) because you’re taking that money away.”

Note: This article has been updated to clarify the application period for the new tax credit.

Related:

• 12 Education Tax Credits and Deductions
• Idaho Tax Guide
• Child Tax Credit 2025: How Much Is It?

You could be itching to get your tax refund earlier — and we don’t blame you. As of early February, IRS tax refunds are bigger, with an average payment of $2,065. That’s over 18% higher than this time last year.

But the IRS can have lengthy processing times, causing you to search for a faster way to get your refund. Last season, 22 million taxpayers found a quicker possibility in early tax refund options.

These strings-attached alternatives will get you an early payment but may also lead to fees, upcharges, and interest rates as high as almost 36%.

Be aware. Know what you’re signing up for, or you may risk owing money on your federal tax refund.

Early tax refund choices for your return

Before we get into the data, let’s look at the definition of refund anticipation loans and checks. Both products operate differently to give quicker access to your tax refund amount.

• Refund Anticipation Loans (RAL). Taxpayers borrow money based on the expected refund amount, with attached interest and fees. Funds go directly into the lender’s account when the IRS disburses payment.
• Refund Anticipation Checks (RAC). The taxpayer’s refund is deposited into a temporary bank account, which the tax preparer uses to write a check (or give a prepaid card) to the taxpayer. Effectively, this option is a preparation fee loan as tax preparer costs are deducted before payment is made to the taxpayer.

In both cases, a third party receives the payment and the taxpayer pays service fees before receiving a smaller refund. While RAC has an average fee of $40 (which might be small for some) the real danger lies in refund anticipation loans.

After all, what happens if you take out a loan and then the IRS reduces your refund or the anticipated amount is smaller than expected? Well, you’re now on the hook for money you no longer expect to receive.

Are early refunds for your taxes legal?

It may sound surprising, but these early tax refund options are legal products. Many taxpayers have used these sometimes costly alternatives to get their refunds early, as recently reported by the Treasury Inspector General for Tax Administration (TIGTA):

• Last tax season, U.S. taxpayers lost over $842 million in early tax option fees.
• One provider offered a 35.5% interest rate plus a finance charge of 7.5% on all loans.
• Loan periods were as short as three months (repayment after the due date would result in late fees and interest).

This means that taxpayers who sought tax relief may have instead signed up for a financial headache, potentially owing more money than was initially due to the IRS. Plus, as of the TIGTA report date, some who chose refund loans were still waiting for payment from the tax agency.

How to get an IRS tax refund early

Fortunately, you may get an “early” refund without signing up for a loan. Here are just a couple of ways to expedite your federal tax refund:

• File early. The busiest part of the filing season is late March to mid-April. If you file earlier, you can stay ahead of the curve and may see a shorter processing time on your payment.
• File electronically and direct deposit when you can. Avoiding the post office during the busy tax season could get you a refund faster and help protect your check from tax refund mail theft.

Remember: Do your research. If you need a tax preparer, find a reputable one. If you want an inexpensive tax preparation service, you can try an IRS service like VITA, which gives eligible taxpayers free tax counseling and preparation services.

Stay informed. And don’t fall for something that sounds too good to be true.

Related Content

• IRS Income Tax Refund Schedule 2025: When Will Your Refund Arrive?
• Federal Tax Refunds Are $526 Bigger This Year: Here's Why
• Direct File 2025 Offers A New Way to File Taxes for Free
• Legislation Cracking Down on IRS Tax Refund Mail Theft Advances

Although we're past the April 15 Tax Day deadline, you may still want to check your bank account: IRS refunds are still rolling out.

The current average federal tax refund is around $3,268, according to the most recent IRS data, which is an almost 8% increase over the same period last year.

However, a larger refund is only beneficial if you can access it. In a historic shift for the 2026 tax season, the IRS effectively eliminated paper checks for most individual returns.

This has triggered a wave of CP53E notices — letters typically sent when the IRS can't verify direct deposit information. Unfortunately, the transition has been plagued by confusion.

As Kiplinger has reported, millions of letters have been sent to unsuspecting taxpayers, including some erroneous CP53E notices. There are also concerns that fraudsters may seize the opportunity to circulate sophisticated forgeries. (For more information on what to do if you receive a direct deposit letter, see our report: Taxpayer Confusion Grows Over Whether CP53E Notices Are Real.)

Otherwise, read on for the 2026 federal tax refund schedule to know when and how you can expect your legitimate payment from the IRS.

Where’s my IRS tax refund?

Your IRS refund depends in part on your filing method. Below are estimated timeframes for when you might expect to receive your tax refund.

• E-filed returns can take up to 21 days to process a refund.
• Mailed returns take four to eight weeks to process a refund.

Note: The above periods are after the IRS has accepted your return.

It’s also important to note that errors in your tax forms, IRS processing delays or bank delays might extend the waiting period for your tax refund.

IRS tax refund delay

Certain factors can affect the timing of your tax refund, including:

• When you filed. Filing during the busiest time of the tax season (roughly late March to mid-April) might delay your refund.
• Which credits you claimed. Certain credits, like the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC), can delay tax returns due to the IRS needing more time to review.
• How you submitted your return. Electronically filed returns typically process one to five weeks faster than mail-in returns.
• If you owed the IRS any money. If you have an outstanding tax liability with the IRS, the tax agency might apply part or all your refund to repay your debt.
  

IRS refund schedule

Your refund delivery is based partly on which filing method and refund delivery method you chose:

Note: The above estimates are based on the IRS having already accepted your return. Processing delays or errors in the return might cause you to receive your federal refund after these dates.

As of the just-completed 2026 tax season, the IRS has generally stopped mailing paper refund checks. However, if you have an exception to this rule (such as no access to a banking service or a certain disability), you might still receive a paper check.

For more information, check out Kiplinger's report, IRS Phased Out Paper Checks: What Happens Next?

Tax refund calendar 2026

Here is a general estimate of when you might expect your 2025 federal tax refund:

Note: The above table is an estimate and can be influenced by several factors, including but not limited to processing delays, tax credits claimed, and whether you filed during the busiest time of the season.

Tax refund status: How to check it

You can check the status of your tax refund by using the IRS “Where’s My Refund?” tool. The webpage will show you the status of your tax refund as early as 24 hours after the IRS has accepted your return.

You can also download the IRS2Go app to check your tax refund status. You can also call the automated IRS refund hotline at 800-829-1954.

State income tax refunds

Each state has a different tax refund schedule. For example, North Carolina paper filers might not receive a refund for up to three months, while Oklahoma taxpayers can expect a refund about five to six weeks after the state accepts the return.

However, some states might allow you to check your tax refund status. Visit your state’s Department of Revenue website for more information.

More on Tax Refunds

• 5 Reasons Your Tax Refund Status is Delayed (and How to Fix It)
• Tax Day Trivia: 6 Surprising Facts About Your 2026 Refund
• 3 Smart Ways to Spend Your Retirement Tax Refund

As the 2025 tax filing season continues, Elon Musk's influence over government systems and recent claims about "deleting" an agency are creating confusion and alarm about potential tax return disruptions.

The concerns come as the IRS is in flux. The agency lost its Commissioner, who resigned on Jan. 20 and awaits confirmation hearings for President Trump’s controversial pick for the role, who has limited experience with tax matters. Additionally, the tax agency faces an indefinite hiring freeze and a loss of billions in funding initially intended to modernize operations and improve customer service and tax enforcement.

It’s also worth mentioning that Musk, who has been deemed a “special government employee” tasked by Trump with cutting government spending through a Department of Government Efficiency (DOGE), heads Tesla, which paid zero income tax last year despite making billions.

Wondering what this means for you? Here’s more to know.

Elon Musk 'deleted' Direct File tax program?

Last week, Musk declared on his social media platform X that he had "deleted" 18F, the digital services agency responsible for developing the IRS Direct File system.

Despite Musk's claim, the Direct File program remains operational and is accepting tax returns for the current tax season, which officially began on January 27, 2025. However, Musk's statement has confused people and raised concerns about the program's future.

• This free tax filing program, which expanded to 25 states for the 2025 tax season, allows eligible taxpayers to file their federal returns directly with the IRS at no cost.
• With an estimated 30 million taxpayers eligible for Direct File this year, any disruption to the service could have far-reaching consequences.
• The uncertainty surrounding the program comes at a critical time for people preparing their tax returns, adding extra stress to an already complex process.

During his confirmation hearing on January 16, Scott Bessent, who has since been sworn in as U.S. Treasury Secretary, committed to maintaining the IRS Direct File program for the 2025 tax season.

Though Bessent didn’t make any long-term commitment, saying, "If confirmed, I will consult and study the program and understand it better and make sure that it works to serve the IRS' three goals of collections, customer service and privacy."

Musk Treasury access unprecedented

Adding to the concerns, Musk's DOGE team gained unprecedented access to sensitive government payment systems in early February. That includes those controlling tax refunds and Social Security payments.

This access (which has since been temporarily blocked by a federal judge), was reportedly granted by Secretary Bessent, It has alarmed lawmakers who expressed concern over the security of taxpayer data and the potential for politically motivated interference in critical payment systems.

Sen. Ron Wyden of Oregon, ranking Democrat on the Senate Finance Committee, expressed worry that Musk-linked officials might attempt to unlawfully withhold payments for various government programs, including tax refunds. Congresswoman Madeleine Dean (D-Pa) echoed these concerns, calling Musk's access to sensitive data "an outrage" and a violation of Americans' privacy.

Sen. Chris Murphy (D-Conn.) told CNN’s Jake Tapper, “Every American needs to know that your information, your personal tax records, have been potentially compromised, that unelected billionaires and his Silicon Valley right-wing friends may have access to all of your personal information.”

Sen. Minority Leader Chuck Schumer (D-N.Y.) told reporters, “We must protect people’s Social Security payments, their Medicare payments, tax refunds, from any possible tampering by DOGE or any other unauthorized entities.”

Tuesday, Sens. Elizabeth Warren (D-Mass.) and Wyden requested that the Government Accountability Office (GAO) open an inquiry into how Musk was given access to the systems.

The Trump administration has noted that Musk is a special government employee. Such employees typically work temporarily for the government, usually no more than 130 out of a year. And Bessent reportedly told lawmakers that Musk doesn't control the Treasury system.

Trump defended the access, telling press reporters, “Elon can’t do and won’t do anything without our approval and we’ll give him the approval where appropriate. Where not appropriate, we won’t.”

For his part, Musk posted the following Tuesday on his social media platform X: "We're never going to get another chance like this. It's now or never. Your support is crucial to the success of the revolution of the people."

Meanwhile, 19 states have filed lawsuits against DOGE alleging improper access to private data and recent reports suggest Treasury "mistakenly" gave significant access to sensitive systems to a member of Musk's team.

Tesla income tax?

Musk has previously advocated simplifying the tax code, suggesting a federal flat tax. Critics argue that such changes could disproportionately affect individuals with lower incomes.

Note: Since taking office, Trump has called for abolishing income tax in favor of tariffs, and other lawmakers have reintroduced a bill to eliminate the IRS in favor of a national consumption tax.

Additionally, while Musk pushes for government cost-cutting and efficiency, his own company, Tesla, has largely avoided significant federal taxes.

• Tesla reported $2.3 billion of U.S. income in 2024 but paid zero federal income tax.
• Over three years, Tesla reported $10.8 billion in U.S. income while paying only $48 million in federal taxes, an effective tax rate of 0.4%.
• The company has reportedly benefited from various tax breaks, including accelerated depreciation and credits for executive stock options.

This contrast between Musk's crusade for government efficiency, his company's tax avoidance strategies, and his federal SpaceX contracts (billions of dollars worth) has led some to question the appropriateness of his role in shaping federal fiscal policy. Some argue further that Musk and his non-government staff operate without proper oversight and potentially violate laws.

In a release, Sen. Patty Murray (D-Wash.) said, “I’ve been hearing from people across my state who are truly alarmed about what Musk and his associates having access to this system could mean for their data—and for funding that they count on.”

Murray went on to describe Musk as "an unelected, unaccountable billionaire with extensive conflicts of interest."

So far, Republican lawmakers in Congress have been mostly silent or supportive of Elon Musk’s access to Treasury systems. Meanwhile, some federal employee unions have already filed a lawsuit to block Musk from accessing the system.

Musk poll on X teases IRS audit

Not a day after the Direct File post, Musk seemed to propose an audit of the IRS through DOGE. In a poll on X, Musk asked his followers if DOGE should audit the federal tax agency, which attracted more than one million responses.

Over 90% of respondents backed the potential audit, including some selecting an emphatic "F Yes" option.

The poll seemed to be a tease, but with high tension over sweeping federal government changes, we'll have to wait and see if an actual audit of the agency comes to pass.

Note: Since then, the Trump Administration offered deferred resignation "buyouts" to millions of federal employees. For now, some IRS employees can't accept any such offers until after tax season and a federal judge has paused the buyout program to consider the legality of the offers.

Bottom line: Trump, Elon, and your taxes

While IRS Direct File is operational for the 2025 tax season, and the agency had hoped to make it permanent, the program's long-term future remains uncertain.

Late last year, Republican lawmakers called for the then-incoming Trump administration to end the program and have since introduced legislation proposing to do so. Industry giants like H&R Block and Inutit’s TurboTax have long opposed the IRS entering the tax preparation business.

As the 2025 tax season progresses, taxpayers are left to try to navigate this uncertain landscape. Hopefully, the confusion surrounding Elon Musk’s Treasury payment systems and shakeups at the IRS don’t disrupt the tax filing experience or tax refunds.

At this point, the impacts, if any, are unclear. So, stay tuned and consult a tax or financial professional with questions about your tax situation and liability.

This story has been updated to reflect court actions regarding the Trump administration's buyout offer program and Musk's access to Treasury payment systems.

Related

• IRS Direct File 2025: What You Need to Know
• IRS Employees Can't Take Trump Buyout Offer Until After Tax Season
• Kiplinger Tax Season 2025 Live Coverage: Updates, News, Tax Tips and More
• Back to the Old Days? What's Wrong With Trump's Plan to Abolish Income Tax

The IRS just announced the new 2025 contribution limits for medical savings accounts like flexible spending arrangements (FSAs) and healthcare savings accounts (HSAs).

Employer-sponsored FSAs allow you to build up a savings nest egg by deducting pretax dollars from your payroll. You can use those funds to pay for qualifying medical expenses or items, some of which are included on Amazon.

If you participate in one of these accounts, your contributions are tax-free. That means they are not subject to federal income tax, Social Security, or Medicare taxes. However, if you exceed those contribution limits, you could face financial penalties.

The good news: FSA and HSA contributions are higher for 2025 than last year. Here’s what you need to know.

New FSA limit for 2025

With a flexible spending account, your contributions can be used to pay for certain out-of-pocket health care costs for you, your spouse, and your dependents. As mentioned, the money you chip into the account is tax-free.

There’s one caveat: FSAs aren’t available for self-employed taxpayers. Additionally, your employer may opt to add to your FSA account, but they aren’t required to.

If you have an FSA account, here are the maximum amounts you can contribute for 2025 (tax returns normally filed in 2026).

• The FSA contributions limit for 2025 is $3,300, that’s up from $3,200 the previous year.
• If your spouse has a plan through their employer, they may also contribute up to $3,300 through payroll deductions in 2025. That means the couple could jointly contribute up to $6,600 for their household.

The maximum carryover of unused amounts to 2025 is $660, up from $640 in tax year 2024.

FSA tax advantages

FSAs are employer-sponsored savings accounts that allow you to set aside money from your paycheck, pre-tax, to pay for your healthcare and dependent care expenses.

You can use your FSA savings to pay for certain medical expenses such as deductibles, co-pays, or medical appointments. According to the IRS, some qualifying expenses include, but are not limited to:

• Prescription medications and over-the-counter (OTC) medications, with a doctor’s prescription.
• Medical equipment and supplies such as bandages and diagnostic devices.
• Prescription eyeglasses and dental work.

You can also use your FSA funds to pay for dependent care expenses for your child or elder care, that are not covered by your insurance.

Penalty for making excess contributions

If you surpass the contribution threshold on your FSA account, you will have to pay regular income taxes on the amount that exceeds the limit. But that’s not all. An excise tax of 6% will also apply to any amount over the contribution limit.

You can withdraw the excess funds before the federal tax filing deadline to avoid the penalty.

Why you should get an FSA

An FSA allows you to build savings using pre-tax dollars from your paycheck for qualifying medical expenses such as doctor’s visits, vision care, dental care, prescriptions, over-the-counter medications, or certain medical diagnostic devices.

A flexible spending account is often offered as a benefit from your employer. For 2025, you can contribute up to $3,300 tax-free, and the funds can be a safety net in case you ever need to pay out-of-pocket for some of the expenses mentioned above.

Be aware: if you don’t spend all the cash in your FSA by the end of the year, you will forfeit that remaining balance to your employer. Additionally, if you surpass your contribution limit every dollar above the threshold will be subject to tax.

If you’re self-employed and FSA is not an option for you, and you’re covered under a high deductible health plan (HDHP) you may want to consider a health savings account (HSA).

Before making a decision, make sure to understand the eligibility requirements, limitations, or expenses tied to these savings accounts.

Related Content:

• 2025 HSA Contribution Limit Rises Again
• What Are the FSA Contribution Limits for 2024?
• The ‘Three Hidden Costs’ of Health Savings Accounts (HSAs)

What is the Earned Income Tax Credit?

The earned income tax credit (EITC) is a federal tax break for low- and moderate-income workers with or without children.

Also known as the earned income credit (EIC), the amount you get depends on your income, filing status, and the number of qualifying children. It’s also a refundable credit, meaning you can get a tax refund even if you don’t owe taxes.

Each year, families look forward to these tax breaks as they can help pay for food, housing, or expenses related to their child’s education and extracurricular activities. The funds can sometimes be used to create a nest egg for emergency savings.

• Nationwide, 23 million eligible workers received $64 billion in EITC last year
• The average household received about $2,916 in EITC for the 2024 tax year (taxes filed last tax season)

The IRS has announced the annual inflation adjustment for the earned income tax credit, as well as other key family tax breaks for tax year 2026 (returns you'll file in early 2027).

Here’s what you should know about the earned income tax credit and whether you qualify for the tax break.

A poverty-fighting tax break

The earned income tax credit has been around for nearly 50 years, and like the child tax credit, it's known as one of the nation’s best poverty-fighting programs for low- and moderate-income earners. The earned income tax credit reduces poverty by supplementing the earnings of low-wage workers.

Before the pandemic, the EITC combined with the child tax credit helped lift 10.6 million people above the poverty line and lessen poverty for 17.5 million households.

According to the Center for Budget and Policy Priorities, these programs lifted 5.5 million children from poverty and reduced poverty to 6.4 million.

Eligibility

Who qualifies for the EITC

The amount of EITC you get depends on your income, filing status, and the number of qualifying children in your household. However, folks without children can also qualify for the EIC.

Whether you are a working individual with children or work but do not have children, to qualify for the 2025 earned income tax credit, you must meet the following basic criteria:

• You must work and have an earned income under $68,675
• Have an investment income below $11,950 in tax year 2025
• Be a U.S. citizen or resident alien all year
• You will not file a Form 2555, Foreign Earned Income
• You must have a valid Social Security number

Social Security number requirement:

Keep in mind, for the EITC, the IRS will not accept the following forms of identification:

• Individual taxpayer identification numbers (ITIN)
• Adoption taxpayer identification numbers (ATIN)
• Social Security numbers or Social Security cards that specify “Not Valid for Employment.”

Earned income tax credit qualifications with children

As mentioned, the eligibility standards for the EITC are split into two categories: those with children and those without. If you have a child, the IRS requires that you meet the following criteria.

• The child must meet age, relationship, and residency requirements
• The qualifying child cannot be claimed by more than one person for the EITC
• The taxpayer cannot be the qualifying child, or dependent of another person

Age

For a child to qualify for the earned income tax credit, they must be under the age of 19 or a full-time student under 24. They must also be younger than you (or your spouse, if filing jointly).

There is one exception: If your child is permanently and totally disabled, the age requirements don’t apply for the EITC. (See: Disability and the Earned Income Tax Credit).

Relationship

To qualify for the EITC, your child must be your son, daughter, stepchild, or adopted child or foster child. They may also be your sibling, half-sibling, or step-sibling. Grandchildren and nieces or nephews are also eligible to be claimed as dependents for the EITC.

Residency

To claim a child for the earned income tax credit, your child must live in the same home as you in the United States for more than half of the tax year. The U.S. includes the 50 states, the District of Columbia, and U.S. military bases. The United States territories are not included: Guam, the Virgin Islands, or Puerto Rico.

Dependent status

If your child can file a joint return with another person (for example, their husband or wife), you cannot claim them on your tax return for the EITC.

Earned income tax credit qualifications without children

If you don’t have a qualifying child, you can still claim the EITC if you meet all of the following eligibility rules:

• You must meet the basic earned income tax credit qualifying rules
• Your main home is in the United States for more than half the tax year
• You must be at least 25 years old but under 65
• You’re not claimed as a qualifying child on anyone’s tax return

What disqualifies you from the EITC?

There are a couple of factors that can disqualify you from the EITC. If one of the following applies to you, you will not be eligible for the tax credit:

1. You or your spouse don’t have a valid SSN.
2. Your earned income and adjusted gross income (AGI) exceeds the EIC limit.
3. Your foreign income investment exceeds the EIC limit.
4. You’ve claimed foreign earned income exclusion on Form 2555.
5. You filed your tax return as ‘Married Filing Separately.’

Keep in mind: your EITC will be denied if you, the taxpayer, are claimed as a dependent on another person’s tax return or if your child doesn’t meet “qualifying” eligibility criteria.

Claiming the Credit

How to claim the EITC

You can claim the earned income tax credit by filing federal tax return Form 1040 or 1040-SR, for U.S. seniors. If you have a qualifying child, you’ll be required to file a Schedule EIC. The form will ask you for details regarding the qualifying child, such as their name, SSN, their date of birth, relationship to you, and number of months they’ve lived with you.

You can also claim the EITC for prior years.

The IRS gives you three years to file and claim a refund from the due date of your tax return. If you’re eligible, you could still have time to claim the EITC for prior years, including:

• For 2024, if you file your tax return by April 17, 2028
• For 2023, if you file your tax return by April 15, 2027
• For 2022, if you file your tax return by April 18, 2026

To file a prior year return complete and file Form 1040 and Schedule EIC for the corresponding year, or file an amended return if you already filed but did not include a Schedule EIC (if you had a qualifying child).

2025 EITC Amount

Earned Income Tax Credit 2025

The EITC is designed for people whose earned income is under $68,675 for the 2025 tax year (tax returns generally filed in early 2026). The amount you get will depend on your adjusted gross income, the amount of investment income earned, your filing status, and whether you have a qualifying child.

Notably, the EITC amounts and phaseout amounts are adjusted for inflation each year. One piece of good news is that tax filers next year will be able to claim slightly more than they did in the previous tax year (more on that later).

2026 EITC Amount

Earned Income Tax Credit 2026

The IRS recently released the new inflation adjustment amounts for 2026 family tax credits, including the EITC.

And here's some good news: the amounts are slightly larger compared to the previous year. These 2026 EITC amounts are for returns typically filed in early 2027.

Additionally, for taxable years beginning in 2026, you won't be eligible for the EITC if your investment income exceeds $12,200.

State Credits

Does your state have an EITC?

To date, 31 states, plus the District of Columbia and Puerto Rico, have their state or local government version of the earned income credit in addition to the federal EITC.

Ten states, including California, Colorado, Illinois, Maine, Maryland, Minnesota, New Mexico, Oregon, Vermont, and Washington, plus the District of Columbia, have reportedly extended eligibility of the credits to certain immigrant taxpayers who file taxes using Individual Tax Identification Numbers (ITIN).

This year, four states expanded their EITCs.

• Connecticut: Households with dependents who already receive the state EITC have an added $250 credit.
• Montana: The refundable portion of the state EITC increased from 10% to 20% of the federal credit amount.
• Vermont: The credit match for workers without children in the home increased from 38% to 100% of the federal EIC.
• Virginia: All households that qualify for the state EITC now have a temporary 20% refundable credit. Before, eligible taxpayers had to choose between a 20% non-refundable credit or a 15% refundable EIC. But the higher amount is set to expire in 2027 unless the state legislature makes the change permanent.

EITC Awareness

EITC: Learn more

If you’d like more information about the earned income tax credit for yourself, a friend, or a family member, keep an eye out for the IRS' EITC Awareness Day.

Each year, the IRS takes a day to shed light on the refundable credits many low- and moderate-income households could be missing out on.

Free tools are also available to help you learn about the EITC and other family tax credits you could be eligible for. (See the IRS EITC Assistant). You can also talk to a certified tax professional if you suspect you may qualify for the federal tax break.

If you’re a government agency, employer, tax preparer, or resident of a rural community who would like to raise awareness about the EITC, you can also see the IRS Partner’s ToolKit or Tax Preparer ToolKit.

Read More

• Child Tax Credit: How Much Is It?
• Non-Refundable vs. Refundable Tax Credits:
• Best States for Middle-Class Families Who Hate Paying Taxes
• Family Tax Credits: Four IRS Changes That Can Save You Money

Every year, taxpayers fall into one of two categories: the owe category or the refund category, and there are reasons you may end up owing one year and getting a refund the next. Either way, now is the time to start getting ready for the 2025 tax season to hopefully get out of the owe category and back into the refund column.

The tax man cometh: Now what?

If you ended up owing Uncle Sam this year for 2023’s taxes, don’t fret. There may be some simple steps you can take to change your fortunes going forward. The first is simple: Review what changed over the previous year. Did you get a new job? What about a promotion? I am sure that felt amazing. But that new corner office could be costing you.

The most common problem I encounter with my clients who are still in the workforce is improper withholdings on their W-4 form. This usually happens when someone switches employers or gets a hard-earned promotion that puts some of their income into a higher marginal tax rate. If this is the case, I recommend you update your withholdings right away on your W-4 with your employer to avoid a surprise tax burden down the road.

If you are retired and owed federal income tax this year for 2023, I would review your withholding amounts on all retirement income sources. Usually, I find an income source with no federal withholding or not enough withholding. The same advice applies here as with your W-4. Update that as soon as you can to help decrease the likelihood of a federal tax bill. If your monthly retirement income sources have the proper withholding, did you take any one-time IRA withdrawals? If you did, there was likely an improper amount withheld for federal tax.

Looking at your withholdings if you’re still in the workforce or retired might get you moving in the right direction, but it doesn’t guarantee a refund. If you’re still in the workforce, consider increasing the amount you are saving in a pre-tax retirement plan or a health savings account (HSA) at work.

For those of you who received federal tax refunds this year for 2023, congratulations! Hopefully, you’ll get another one next year. If you do, you’ll have three choices in front of you: Spend it, save it or invest it.

Spend your refund

Advertisements will likely tell you to spend your refund on everything from a new TV to a down payment on a car to a fun vacation. Doing this might make sense for you. Especially if you need to replace certain items. But there are other ways you can “spend” your refund.

Your federal tax refund can also pay off one of your high-interest credit cards, your student loans or your car loan. By paying off debts, you will free up that minimum monthly payment amount to allocate to something else. That could be hundreds of dollars now available in your monthly budget!

If you’re one of the fortunate few with no debt, then what should you “spend” your refund on? You could gift it to a friend or family member, maybe donate to a cause you’re passionate about or spend it on yourself to further your education — leading to raises in your working income or expanded horizons.

Save your refund

I recommend having three to six months’ worth of your monthly expenses in a savings account. So, if you don’t need to spend your return, you can use it to build or rebuild your emergency fund. This way you’ll be able to access your cash quickly to help pay for things when life happens.

If you have all your extra cash in investments and need to take a withdrawal when the market is down, you are forced to sell investments that have depreciated in value. If you have your emergency fund in a savings account, then the market shouldn’t have an impact. If you use your emergency fund to cover your expense AND you have an investment account, you can always sell off investments when the market is up to replenish the cash in your savings account. These options may help you handle emergencies that life may throw at you.

Invest your refund

The last path is to invest. I have clients in the workforce who use their federal tax refunds for Roth IRA or traditional IRA contributions. Non-retirement investments are available at any age, and it doesn’t matter if you are working or retired. There are a lot of options available, but the most common ones I see are mutual funds, annuities and certificates of deposit (CDs). I work with individuals who also use their refund to add to a 529 plan that can be used for future education expenses. Sometimes these 529 contributions can give you a state income tax deduction, depending on the 529 plan and where you live. I would recommend working with your financial professional who can help illustrate the pros and cons of each investment to help you make an informed decision.

Finally, I would encourage you to try to get your federal refund amount as close to $0 as possible. I’ve heard of some large federal refund stories, but it would be better to have access to that money throughout the year. I suggest teaming up with a tax preparer who can assist with getting your federal tax withholding just right and be a trusted point of contact when your financial picture changes.

If you spend your refund, spend it wisely, and if you save it, make sure you are getting a good interest rate. If you choose to invest, team up with a financial professional who is passionate about financial education and will lead you to an informed decision.

This material was created for educational and informational purposes only and is not intended as tax or investment advice. There is no assurance that the techniques and strategies discussed are suitable for all investors or will yield positive outcomes. The purchase of certain securities may be required to effect some of the strategies. Investing involves risks including possible loss of principal

The views expressed here are those of the author(s) and do not necessarily represent the views of TruStage. Securities distributed by CUNA Brokerage Services, Inc. (CBSI), Member FINRA/SIPC, a registered broker/dealer, 2000 Heritage Way, Waverly, Iowa 50677, toll-free 866.512.6109. CBSI is a limited business broker/dealer (Member FINRA/SIPC), a fully owned subsidiary of TruStage Financial Group, Inc. Non-deposit investment and insurance products are not federally insured, involve investment risk, may lose value, and are not obligations of or guaranteed by the financial institution. Representatives offer retirement and investment education but do not provide investment, legal or tax advice. Participants are encouraged to consult their financial professional. CORP, TRS-6866200.1-0824-0926 611214-01-02

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• How to Optimize Your RMDs in Retirement
• Midyear Tax Planning Strategies: Five Things to Do Now
• A Bunch of IRS Tax Deductions and Credits You Need to Know
• Three Mistakes to Avoid in Retirement Tax Planning
• What’s the Difference Between a CPA and a Tax Planner?

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Unclaimed tax refunds totaling about $1 billion remained unclaimed at the IRS because millions of taxpayers hadn't filed tax returns for the 2020 tax year. (In other words, you might have had money waiting for you and not have known.)

“There’s money remaining on the table for hundreds of thousands of people who haven’t filed 2020 tax returns,” IRS Commissioner Danny Werfel said in a release. “We want taxpayers to claim these refunds, but time is running out for people who may have overlooked or forgotten about these refunds.”

The deadline to file these returns was Friday, May 17, 2024.

Unclaimed IRS tax refund

• Normally, taxpayers have three years to file their federal tax return and to claim tax refunds due, if any. 
• After the three years pass, the unclaimed refund money becomes U.S. Treasury Department property. 
• While that is the normal rule, the three years for filing returns and claiming refunds were extended for 2020 federal tax returns because of the pandemic.

So, for 2020 returns that would typically have been filed in April 2021, the window for unfiled returns was pushed to May 17, 2024. That means that people who still haven’t filed their 2020 returns have missed the deadline to avoid losing tax refunds associated with that tax return.

Average tax refund amount

How much money are we talking about? The IRS says that the average median unclaimed refund amount for 2020 is $932. That means about half the refunds are more than that amount and about half are less. 

In terms of who is probably due a refund, Commissioner Werfel said, “Students, part-time workers, and others” who may have little income sometimes do not file a tax return and never realize they may be owed a refund.

• Even though the agency has estimated the average refund, the amount you may receive (if you are due a refund and filed your 2020 tax return by the May 17 deadline) will depend on your specific tax situation.
• (Also, it’s important to keep in mind that if you owe the IRS or a state tax agency or have unpaid child support or other federal debts, you might not receive a refund.

Additionally, by not  filing a tax return, the IRS notes that “people stand to lose more than just their refund of taxes withheld or paid during 2020.” 

For example, many people with low and moderate incomes may be eligible for the Earned Income Tax Credit (EITC). For 2020, the EITC was worth as much as $6,660 for taxpayers with qualifying children. Another tax credit that may apply for 2020 tax returns includes the Recovery Rebate Credit.

Unclaimed IRS refunds by state

The IRS published state-by-state estimates of how many people might be due refunds. That information also shows the median potential refund and the total potential refunds for each state.

• For example, in California, about 88,200 people had unclaimed IRS refunds at an estimated potential median amount of $835 each. That’s more than $94 million in unclaimed money. 
• Some states with relatively high estimated potential median refund amounts are Pennsylvania at $1,031, New York at $1029, and Maryland at $991. 
• In West Virginia, as another example, the IRS estimates that about 3,800 people were due refunds with the total potential refunds for the state being a little over $4 million. 

For more information about the number of people due 2020 IRS refunds and the estimated amounts of money involved, visit the IRS website. 

Unclaimed 2020 refund: What to do

If you thought you had an unclaimed IRS refund, you should have reviewed and gathered the records needed to file your 2020 federal income tax return by May 17, 2024. That might have seemed daunting because nearly three years have passed, but the IRS has ways you can request key documents and transcripts.

For example, if you didn't have a W-2, or other important tax forms from 2020, like a 1099 form, you could request copies from your former employer. Banks, or other payors, for certain tax forms, may be able to help as well.

If your former employers or payors cannot help you, the IRS has a Get Transcript Online tool.  If you need to file your federal income tax return for 2020, the IRS has free resources like the Interactive Tax Assistant. You might also be eligible for free tax preparation help through the VITA and Tax Counseling for the Elderly programs. 

There is no penalty for claiming a refund on a late-filed tax return and the IRS says direct deposit is the recommended way to receive your refund. 

Related

• Types of income the IRS Doesn't Tax
• What's the Standard Deduction?
• Can the Earned Income Tax Credit Help You?

You may have already received your tax refund — or you will soon. The average tax refund this year is $2,252, the IRS reported as of mid-February.

When the check arrives or is automatically deposited in your bank account, it can be tempting to indulge in dinners out, add an extra streaming service or buy presents for everyone in the family (and all of your friends, too).

Before you think up a million more ways to spend your refund, consider these seven ways to invest in yourself— and your future — instead. You’ll be happy you did.

1. Use your tax refund to build an emergency fund

Earmarking funds from your tax refund to be put into an emergency fund can ensure the money is there when needed.

The best way to set up an emergency fund is to have a portion of each paycheck go directly into a savings account via direct deposit. This ensures consistency and removes the temptation to spend the money before you save it.

A high-yield savings account is an excellent place to save your emergency fund because it offers a higher interest rate than a traditional savings account, allowing your money to grow over time while remaining easily accessible.

The money you set aside from your tax refund can come in handy if your refrigerator gives out. If you're ready to start saving, use our tool below, in partnership with Bankrate, to compare savings rates today.

2. Pay down debt

There's nothing exciting about paying down debt. That is until your statement shows it has been paid in full. What a sense of relief and accomplishment.

Total household debt rose by $93 billion to reach $18.04 trillion in the fourth quarter of 2024, according to the latest Quarterly Report on Household Debt and Credit by the Federal Reserve. Carrying around that much debt can be stressful.

While your tax refund may not pay off a loan or loans, using it to make a payment to pay down a loan is an excellent option if you stand to save money on interest, your credit score needs a boost, or you want to improve your mental health by lowering your debt and reducing your monthly payments.

3. Pay down student loans

If you have private student loans or don’t qualify for federal assistance, using all or part of your tax refund to pay down your balance can be a smart move. According to NerdWallet, approximately 42.7 million Americans have federal student loan debt, which accounts for about 12.5% of the U.S. population.

This growing debt crisis is largely driven by the rising cost of college, which has more than doubled over the past 40 years. In the fourth quarter of 2024, student loan debt increased by $9 billion, bringing the total to more than $1.62 trillion, according to the Federal Reserve.

One way to make a dent in high student loan balances is to use your tax refund to make an additional payment. There’s usually no penalty for making extra payments, and you’ll save money by paying less in interest over time.

Just be sure you carefully document any extra payments you make, and that they are reflected in your next loan statement.

4. Pay down credit card debt

By the end of 2024, credit card debt rose to a record $1.21 trillion, according to the Federal Reserve. What makes that figure even more chilling is that the average credit card interest rate on accounts with balances was a whopping 20.09%, according to Bankrate.

So, if you carry a balance of $5,000, you’ll pay just over $82.56 in interest alone (based on the 20.09% interest rate) during your 30-day billing period.

That may not seem like a lot, but interest adds up quickly. One of the best ways to use your tax refund is to pay down or pay off high-interest credit cards, especially if you're carrying high balances or you're maxed out on several cards.

This rule holds true even if you're tempted to spend more on a rewards credit card to get points or miles.

5. Make a down payment on a new car

If your current vehicle is barely rambling down the road, using your tax refund as a down payment may get you more than just a new ride; you’ll also get reliability, a new warranty, new technology and additional safety features. Plus, using your refund as a down payment can help lower the overall cost of your vehicle loan.

If you're considering an electric vehicle (EV), now may be the time to buy. Changes to federal policy could phase out the $7,500 EV tax credit and other incentives, increasing the overall cost of EV ownership. Using your tax refund toward an EV while credits are still available can maximize savings and help offset the purchase price.

Moreover, potential tariffs on automotive imports from Canada and Mexico could soon increase vehicle prices by up to 25%. If you to use your tax refund as a down payment can help you secure favorable terms before these price hikes take effect.

6. Invest the funds

​If you're considering investing your tax refund for short-term goals like purchasing a home or car, it's important to choose investment vehicles that align with your timeline and risk tolerance.

If you're considering investing your tax refund in the short term, the stock market may not be the best option due to its volatility. Instead, consider more stable investment vehicles such as certificates of deposit (CD) or money market accounts.

As of March 2025, some institutions are offering 1-year CDs with annual percentage yields (APY) exceeding 5%. Similarly, money market accounts are offering competitive rates of APY of up to 4.50%.

These options allow you to grow your tax refund with minimal risk, aligning well with short-term financial objectives.​

7. Make some home repairs

If you’ve been putting off replacing old windows or carpet in your home, now may be the time to put that tax refund to good use. The IRS encourages homeowners to renovate their homes by providing tax deductions for certain types of improvements.

While some renovations don’t qualify, many are eligible if they are permanent, major renovations that add value to your home. In fact, you can save up to thousands of dollars on renovations or improvements that are energy efficient. These may include adding an energy-efficient HVAC system, energy-efficient windows or additional insulation, or modifying doorways for wheelchairs and walkers.

If you intend to sell your home soon, you might want to focus on adding the home features today's buyers want most.

When is the tax filing deadline this year?

The deadline for personal federal tax returns is April 15, except for taxpayers living in Maine or Massachusetts. You have until April 17 due to state holidays.

Related Content

• Tax Changes and Key Amounts for the 2024 Tax Year
• Tax Season is Here: Big IRS Tax Changes to Know Before You File
• Types of Income the IRS Doesn't Tax
• The Extra Standard Deduction for People Age 65 and Older
• What's Happening With the New Child Tax Credit?

The latest IRS data show that the average federal tax refund is approximately $3,182. That’s more than $140 (5.1%) higher than it was at this time last year. But that doesn’t mean everyone will get a bigger tax refund from the IRS this year. Here are some reasons your refund could be more — or less — than last year.

2024 tax refund

IRS inflation-adjusted amounts could partially account for higher refunds in 2024. For example, 2023 standard deduction amounts increased by more than 6%, and federal income tax brackets also increased, so taxpayers who received only small raises (or none at all) may see a big difference in their 2023 tax liability when they file.

Families with lower incomes could see a significant increase in refund amounts too, even if they don’t benefit from the higher standard deduction. The maximum earned income tax credit (EITC) amount increased by nearly $500 for the 2023 tax year. And because the credit is 100% refundable, eligible taxpayers could receive the entire amount (up to $7,430) back as a tax refund.

What about the child tax credit? If the new child tax credit (CTC) becomes law this year, some families could receive even more money back as a tax refund.

However, the bipartisan tax bill, which includes an expansion to the CTC, is currently stalled in the Senate. So, there is no guarantee that the bill will become law before the end of the 2024 filing season — if at all.

What could cause a lower tax refund? There are several reasons your federal tax refund could be less this year.

• If your dependent child turned 17 in 2023, they won’t qualify for the CTC.
• Other major events, such as getting a divorce or an adult dependent moving out of the home, can decrease your refund amount.
• If you (or a spouse if filing jointly) had a significant increase in income, you could be disqualified from claiming certain credits.
• Underpaying when you made estimated tax payments for 2023 will increase your tax liability when you file.

There are many more reasons you could see your tax refund decrease (or your tax bill increase) in 2024. So, you may see a difference in your refund this year, even if none of the above events apply.

IRS refund schedule 

While several “IRS refund schedules” are available online, the dates on those schedules are estimates. Some tax returns take longer to process than others, and several things, including incomplete returns and refunds that need adjusting, can cause processing delays. 

However, the IRS issues refunds for most e-filed returns within three weeks. (Processing can take up to eight weeks for paper returns). E-filing and choosing to receive your refund via direct deposit remain the best options for receiving your refund sooner. You can begin checking the status of your tax return with ‘Where’s My Refund’ within 24 hours of IRS acceptance.

Where's my refund

To access the "Where's My Refund" tool, you need to enter your Social Security number or individual taxpayer identification number (TIN), the filing status used on your federal income tax return, and the exact whole dollar refund amount shown on your return. You can use either spouse's Social Security number if you filed a joint return. 

'Where's My Refund' is only updated once per day  —  usually at night  —  so there's no need to check your status more often than that.

For more information see: Where's My Refund? How to Track Your Tax Refund Status.

Related Content

• What's Happening With the New Child Tax Credit?
• Can the Earned Income Tax Credit Help You?
• How Much Richer Could You Be Without a Big Tax Refund?

According to IRS data, the average tax refund was only $1,395 as of Feb. 2. At that same point last year, tax refunds averaged $1,963. That’s an almost 29% ($568) difference. This data may sound alarming if you are among the approximately 75% of taxpayers who receive a tax refund. But should you worry about getting a smaller amount back from the IRS in 2024? 

Here’s what you need to know.

IRS: Tax refunds about 30% less this year

The 2024 tax season began less than a week before the earliest IRS refund data was released, so the agency had only processed 13,928,000 tax returns at that point. While that number might seem high, it was about 3 million fewer than the 16,767,000 returns processed at the same time last year. There are a couple of things that could account for the difference.

• Tax season started later this year, which could partially account for fewer processed returns.
• Some taxpayers who usually file taxes early may be waiting to file due to the proposed new child tax credit legislation being negotiated in Congress. (Note however, that the IRS has said that people should file their returns when they are ready and not wait on Congress since any necessary refund adjustments will be processed automatically by the IRS.)

The good news is that the average refund amount increased to $1,741 for the week ending on Feb. 9. That's a more than $300 increase from the prior week. 

And although that amount is still lower than it was at that point last year, taxpayers who are eligible for the earned income tax credit (EITC) won’t receive their refunds until later this month, at the earliest. Since the EITC is worth up to $7,430 for the 2023 tax year, average refund amounts will most likely increase further as tax season progresses. 

Why your tax refund could be lower than expected

Keep in mind that just because early tax filing data doesn’t fully reflect 2024 refund amounts doesn’t mean your refund won’t still be lower this year. Not adjusting tax withholdings on your W-4 Form after experiencing a life change (for example, a change in the number of dependents) can increase your tax liability when you file. And if a dependent turns 17 in 2023, they will no longer be considered a qualifying child to claim the child tax credit (CTC.) 

Here are a few more of the many reasons that can cause lower tax refunds (or higher tax bills):

• Making more money (or a spouse making more money, if filing jointly) can reduce the amount of the EITC you qualify for and might even disqualify you from claiming it altogether.
• Having a dependent turn 19 (or 24 if a full-time student) also affects the EITC for some taxpayers.
• Starting a side gig or business and not making enough estimated income tax payments can result in a higher tax bill.
• You could lose out on the child and dependent care credit if you stopped paying for child care in 2023 or if you paid for care for a non-disabled child who turned 13. (A dependent with a disability may qualify for the tax credit, regardless of age.)

Additionally, taxpayers who are still working but started collecting Social Security retirement benefits last year may experience a hike in federal income tax. As Kiplinger has reported, retirees are more likely to pay taxes on Social Security benefits when they have other significant income. That’s because the IRS uses your total combined income to calculate tax on Social Security.

Are there ways to get a bigger tax refund? 

While you can’t change events that occurred last year, there are still some things you can do to ensure you get the biggest tax refund possible (or lower your tax bill). Of course, you’ll want to make sure you don’t miss any of the often overlooked tax deductions and credits, but eligible taxpayers can take additional steps.

• If you haven’t reached 2023 HSA contribution limits, you have until April 15, 2024, to make contributions for the 2023 tax year. (This date may be different for states with IRS tax deadline extensions.)
• The 2023 contribution deadline for traditional and Roth IRAs is also April 15. (Roth IRA contributions are not tax-deductible, but taxpayers with lower incomes might qualify for the Saver’s Credit if they make contributions.)

It’s also important to note that while most people take the standard deduction, some taxpayers benefit from itemizing their deductions. Because individual tax situations differ, working with a qualified tax professional is the best way to ensure you take advantage of every tax break.

Related Content

• What's the 2023 Standard Deduction?
• What's Happening With the New Child Tax Credit?
• Tax Season is Here: Big IRS Tax Changes to Know Before You File
• 10 Most-Overlooked Tax Deductions and Credits

Can you expect faster tax refunds in the future? Recent customer service improvements and technology upgrades, including an accelerated IRS paper processing initiative, signal a new “normal” at the agency — where people will receive their federal tax refunds sooner than in the past. 

The funding for the IRS improvements, some of which recently helped the agency clear a pandemic backlog of over 23 million unprocessed tax returns, have come thanks to the Inflation Reduction Act (IRA). The IRA initially allocated $80 billion in funding for the IRS over ten years. And although some of those funds have been clawed back in recent legislation, the agency has a detailed plan for using the funds.

Some taxpayers already saw the benefits of IRS service improvements during the 2023 filing season. In an annual report to Congress, The National Taxpayer Advocate's office points to “quicker refunds for millions of taxpayers.”  

Additionally, IRS Commissioner Danny Werfel said in a statement, that the IRS has “dramatically improved phone service thanks to more staff," Werfel added, "More walk-in services are available across the country. New digital tools have been added. And these are just the first steps."

IRS Paperless Processing Initiative

Most recently, the IRS announced an acceleration of its "paperless processing initiative," which will "expedite refunds by several weeks," according to the agency. Going paperless will make the tax season more convenient for taxpayers by allowing them to respond to more notices online. Paperless processing will also eliminate the need for IRS staff to manually enter taxpayer information.

• The IRS plans for taxpayers to be able to "digitally submit all correspondence, non-tax forms, and responses to notices" for the 2024 filing season.
• For the 2025 filing season, the IRS estimates an additional 150 forms will be mobile friendly.
• The IRS also plans to digitize up to 1 billion historical documents for the 2025 filing season. This will allow taxpayers to access their data and is estimated to save the IRS roughly $40 million per year in storage costs.

New IRS Agents and Faster Tax Refunds

IRS service improvements are also important. As of February 2023, approximately 23.5 million unprocessed tax returns had piled up in part due to the COVID-19 pandemic. That backlog of unprocessed returns caused millions of refund delays. (In some cases, it took years for refunds to hit people's bank accounts). However, the IRS previously announced that it cleared that backlog and did so at a faster-than-average rate. 

In recent years, the IRS hasn’t had enough staff to work through the unprocessed paper returns or answer taxpayer calls in a timely manner. Since then, the IRS has hired 5,000 new representatives to answer customer calls. 

• According to the Treasury Department's 2023 Filing season report card, the IRS effectively cut hold times this year by 85%. 
• Prior to the new staffing, average call hold times during tax season were 27 minutes. 
• Hold times are now only four minutes, meaning that many taxpayers can respond to IRS notices and resolve processing delays faster. 

More IRS.gov Tools

Increased IRS funding has allowed the IRS to expand the use of digital scanning. The agency hopes that continued advancements in scanning, and other planned technology upgrades, lead to even faster processing times for paper returns and tax refunds.

The IRS also wants to expand its Document Upload Tool, so you can respond to more types of IRS notices online. Contacting the IRS is also more convenient with a new callback feature. The feature allows you to choose a prompt for the agency to call you back instead of waiting on hold.

The IRS's $80 billion spending plan includes hiring 20,000 more employees over the next two years. That additional staffing, including highly trained IRS agents, could mean more representatives available to answer phones, review, and audit tax returns. That could result in even shorter call waiting times, faster tax refund processing, and possibly more audits for large corporations and wealthy taxpayers.

Where’s Your Refund?

And, if you’re wondering about the status of your federal tax refund for this year, you can use the Where’s My Refund portal, which is available on the IRS website. Although the average tax refund is lower this year compared to last, it is still $2,878 (as of April 7).

Unclaimed tax refunds totaling about $1 billion remain unclaimed at the IRS because millions of taxpayers haven’t filed their tax returns for the 2021 tax year. (In other words, you might have money waiting for you and not even know it).

As former IRS Commissioner Danny Werfel has said, “Many people may have overlooked or forgotten about these refunds.” As a result, the IRS recommends taxpayers start soon to ensure they don’t miss out.

$1 billion unclaimed tax refunds: Are you due one?

Normally, taxpayers have three years to file their federal tax return and to claim tax refunds due, if any. After the three years pass, the unclaimed refund money becomes U.S. Treasury Department property. While that is the normal rule, you may have seen that the three years for filing returns and claiming refunds was extended for some federal tax returns because of the pandemic.

Basically, if you haven’t filed your 2021 return, you have until Tax Day 2025 to do so before they lose tax refunds associated with that tax return.

Average Refund Amount of $781

How much money are we talking about? The IRS says that the average median unclaimed refund amount for 2021 is $781. (About half of the refunds are more than that amount and about half are less.)

In terms of who is probably due a refund, the IRS has mentioned students, part-time workers, and others with little income who may overlook filing a tax return and never realize that they may be owed a refund.

Even though the agency has estimated the average refund, the actual amount that you may receive (if you’re due a refund and file your 2021 tax return before the April deadline) will depend on your specific tax situation.

However, the IRS has created state-by-state estimates of how many people might be due refunds. That information also shows the median potential refund and the total potential refunds for each state.

• For example, in California, 1116,300 people have unclaimed IRS refunds at an estimated potential median amount of $600 each. That’s potentially more than $92 million in unclaimed money.
• Some states with relatively high estimated potential median refund amounts are Massachusetts at $936, New York at $995, and Rhode Island at $946.
• In West Virginia, as another example, the IRS estimates that about 4,800 people are due refunds with the total potential refunds for the state being about $4.4 million.

For more information about the number of people who may be due 2021 IRS refunds and the estimated amounts of money involved, visit the IRS website.

Unclaimed IRS Refunds: What Should You Do? 

If you think you may have an unclaimed IRS refund, you should review and gather the records needed to file your 2021 federal income tax return by April 15, 2025. That may seem daunting because several years have passed, but the IRS has ways to request key documents and transcripts you may need to file.

For example, if you don’t have a W-2, or other important tax forms from 2021, like a 1099 form, you can request copies from your former employer. Banks, or other payors, for certain tax forms, may be able to help as well.

If your former employers or payors can’t help you, the IRS has a Get Transcript Online tool. The agency also has a way to request a transcript of your wage and income. While, according to the IRS, their online transcript tool is a fast and relatively easy approach, the agency warns that ordering a transcript using a written request can take several weeks.

Note: Keep in mind that even if you are due a refund from 2021, the IRS might hold on to your check if you haven’t filed tax returns for 2022 and 2023. Also, if you owed the IRS or a state tax agency or have unpaid child support or other federal debts, you might not receive your refund money.

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Federal income tax refunds are often the largest single check that some people receive, with this tax season's year's average refund being around $3,182, according to IRS filing statistics. If you are not one of the 8 out of 10 Americans who opt to receive their tax refund through direct deposit, it is worth considering. According to the IRS, Direct deposit is the best way to receive your tax refund because it's safer, faster, and greener than getting your refund through a physical check in the mail.

With direct deposit, the IRS says your refund won't be lost or stolen. (The same electronic transfer system that processes your refund is used to transfer 98% of Social Security and Veterans Affairs funds to millions of Americans.) You will usually receive the money in less than 21 days, which is a shorter time than the month or more that you typically have to wait for when your tax refund check is sent in the mail. 

Direct deposit is also cheaper. Every paper tax refund check issued by the federal government costs taxpayers more than a dollar, while each direct deposit only costs a dime. Plus, direct deposit is simple to set up. Here’s how.

How to set up direct deposit for your tax refund

Setting up direct deposit is simple whether you are filing your federal income tax return on paper or electronically, there will be an option to select direct deposit as your refund method. Or you can tell your tax preparer that you want to use direct deposit.

Either way, you'll need to know your bank account number and your routing number, which can be easily found through your online banking account. You can also find this information at the bottom of a check or by contacting your bank.  

You can also split your direct deposit between two or three financial accounts, including your IRA. That refund deposit split can be done electronically, or if you are filing a paper return, you can use IRS Form 8888 to allocate your refund. 

Remember: you should only deposit your tax refund into a United States bank and in an account in your name, or your and your spouse's name if you have a joint account. 

What if I don't have a bank account?

Don’t have a bank account? You can get more information on choosing and opening a bank account by going to the FDIC website or by using the National Credit Union Administration’s Credit Union Locator Tool.

Veterans who don't have a bank account can use the Veterans Benefits Banking Program (VBBP) to access financial services at participating banks, according to the IRS. The VBBP is a partnership between VA and the Association of Military Banks of America (AMBA) designed to offer Veterans another way to receive and manage their VA benefits.

Also, if you have a prepaid debit card, the IRS says that you may be able to have your refund deposited to the card. That's because some reloadable debit cards are associated with a routing number and account number that you could provide to the IRS to deposit your tax refund.

How long will it take to receive my refund?

How long it takes to get your tax refund depends both on how you file and how you’ll receive your payment. 

Those who file electronically and opt to receive payment by direct deposit can usually expect to receive their refund within 21 days. If you choose to file by paper, you’ll likely have to wait at least four weeks before funds hit your account, and even longer if you plan to receive a check in the mail. 

Although the vast majority of tax refunds are received in less than three weeks, delays can occur. For example, if there are any errors on your taxes, you will have to wait longer to receive your refund while these errors are amended. Also, last tax season, many Americans waited longer than usual for their tax refunds due to the IRS backlog of 10.2 million unprocessed returns, mostly paper-filed. That's partly why many people file their federal tax returns electronically.

Can I track my tax refund?

To track your refund, the IRS offers an online "Where's My Refund?" feature. You can track your tax refund regardless of whether you filed your tax return by mail or electronically. Alternatively, you can call 800-829-1954 to get information on the status of your refund.

If you file electronically, you will only have to wait 24 hours before you can track the status of your refund. But if you filed your federal income tax return by mail, it can take six months or more.

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We are just starting 2023, but some people already want to know when you can file taxes this year. That's understandable, because generally, the sooner you file your federal income tax return, the sooner you will receive your tax refund--if you're due one. 

So, when can you file taxes this year? Here's information you need to know.

When You Can File 2022 Taxes

This year, the IRS started accepting 2022 tax returns at 9:00 a.m. ET on January 23, 2023. That's one day earlier than last year.

If you wanted to file your return as soon as possible and made $73,000 or less in 2022, IRS Free File opened on January 13. 

It should also be noted that participating Free File providers began accepting completed returns starting on January 13 and held them until January 23, when they could be filed electronically with the IRS. Other tax preparation software companies and tax professionals may also accept or prepare tax returns before January 23 and hold them until the IRS begins accepting returns.

If you prefer to wait to file your taxes, you have until April 18, 2023, to file your 2022 federal income tax return or request a tax filing extension. 

Normally the due date is April 15, but since that day falls on a weekend this year and the next business day is a holiday in Washington, D.C. (Emancipation Day), the deadline is pushed to April 18. 

Anyone requesting an extension will have until October 16, 2023, to file their 2022 federal income tax return (although payment of any tax owed is still due on the original April 18 deadline).

Who Must File a Tax Return?

Not everyone is required to file a tax return. If your income is under a certain amount (see table below), you aren't required to file a tax return because you will not owe any tax.

However, even if your income is below the applicable threshold, you still may want to file a 2022 tax return anyway. For example, you will need to file a return to claim certain tax credits, such as the:

• Earned income credit;
• Additional child tax credit;
• American Opportunity credit;
• Credit for federal tax on fuels;
• Premium tax credit; and
• Credits for sick and family leave.

When Will Tax Refunds Arrive?

If you have a federal tax refund coming, you could get your money back in as little as three weeks. 

In the past, the IRS has issued over 90% of refunds in less than 21 days. If you want to speed up the refund process, e-file your 2022 tax return and select the direct deposit payment method. That is the fastest way. 

Paper returns and checks slow things down considerably.

However, don't expect your refund before mid-February if you claim the earned income tax credit or the additional child tax credit. 

By law, refunds for returns claiming these credits must be delayed. This applies to the entire refund, not just the portion associated with the credits. According to the IRS, its "Where's My Refund" tool should provide an updated status for your refund by February 18 if you claim one of these credits. 

The IRS also expects most refunds that are held up because the earned income tax credit or additional child tax credit was claimed to be available in bank accounts or on debit cards by February 28 if you chose direct deposit and there are no other issues with your return.

Time may be running out for people who qualify for a chunk of the $1.2 billion in tax refunds owed to taxpayers who paid penalties for late tax returns in 2020 and 2021. The IRS is trying to get the refund payments out the door quickly so it can start prepping for the upcoming tax season and continue working on its backlog of unprocessed tax returns. As a result, it set a tight deadline for filing the underlying tax return – and that deadline is this week!

Why Are Bonus Tax Refunds Being Sent?

The COVID-19 pandemic really messed up the 2020 and 2021 tax return filing seasons. You couldn't meet with your accountant face-to-face, IRS employees weren't answering the phones, new COVID-relief laws required tax form changes, and other odd twists and turns just made things more confusing and difficult at tax time. To give people and businesses a little more time to sort through the chaos, the IRS pushed back the tax return filing deadlines in 2020 and 2021. But that wasn't enough help for everyone. Some taxpayers still filed their tax return late and were hit with an IRS penalty for it. However, the good news is that some of those people and businesses are getting additional tax relief now. And you don't have to do anything to get it – the IRS will automatically send it to you if you satisfy all the requirements.

Not everyone who received an IRS penalty notice during the pandemic will get a refund, though. This new tax relief measure only applies to certain penalties assessed for specific types of tax returns. And, of course, if you were hit with a qualifying penalty but didn't actually pay it, you won't receive a refund check from the IRS (although you'll no longer owe the penalty to the government).

General Penalty Refund Requirements

A few requirements must be satisfied before a refund payment will be issued. First, tax refunds will only be sent for late filing penalties associated with tax returns for the 2019 and 2020 tax years that were due in 2020 and 2021, respectively. So, for example, you're out of luck if you were hit with a penalty for filing your 2018 tax return after the due date. There's no relief if you missed this year's tax filing deadline, either.

Second, refunds and abatement of late filing penalties only applies to certain types of tax returns. The 1040 series of returns that individuals file is on the list (i.e., Forms 1040, 1040-C, 1040-NR, 1040-NR-EZ, 1040 (PR), 1040-SR, and 1040-SS). Income tax returns for general estates and trusts (Form 1041), Alaska Native Settlement Trusts (Form 1041-N), and qualified funeral trusts (Form 1041-QFT) qualify, too.

Late filing penalties associated with various corporate income tax returns qualify for refunds as well (e.g., Form 1120 series). Penalty relief is also available to employers and other businesses that filed certain information returns late (e.g., 1099 forms). The IRS says that penalty refunds may also be sent to taxpayers who filed of various international information returns, such as those for reporting transactions with foreign trusts, receipt of foreign gifts, and ownership interests in foreign corporations.

Third, in most cases, the tax return in question must be filed no later than September 30, 2022 – that's the deadline you need to worry about this week! So, if you're still waiting to file your return, now is the time to act if you want your penalty to be erased.

(Note: When it comes to penalty relief for the domestic information returns, the September 30 due date doesn't apply. Instead, eligible 2019 returns must have been filed by August 3, 2020, while eligible 2020 returns must have been filed by August 2, 2021.)

Penalties That Won't Be Refunded

Tax refunds and penalty abatement are only available for the late filing penalty, which is 5% of the tax due for each month (or part of a month) your return is late, up to a maximum penalty of 25%. Relief is not available for other penalties, such as the late payment penalty or interest paid.

No refunds or abatement is not available where a fraudulent return was filed. Relief also doesn't apply if a penalty is part of an accepted offer in compromise or a closing agreement, or where the penalty was finally determined in a court proceeding.

Will the September 30 Deadline Be Extended?

The IRS first announced the penalty relief on August 24. That only gives taxpayers a little more than five weeks to meet the September 30 deadline. Many affected taxpayers and tax professionals want more time. They don't think five weeks is enough time to get their documents in order and file the necessary tax returns. Several Republican lawmakers have even asked the IRS to push the deadline into November.

It's always possible that the IRS will adjust the deadline at the last minute, but that appears to be very unlikely. So, if you're otherwise eligible for a penalty relief tax refund, don't delay the filing of your 2020 or 2021 tax return any longer hoping that the IRS will change course. Get it done ASAP and beat the September 30 deadline.

But, so far, the IRS hasn't budged. The agency already has a lot on its plate and wants to get these penalty relief refund payments out of the way as soon as possible. "We understand the concerns being raised by the tax community and others about the September 30 penalty relief deadline," said IRS Commissioner Chuck Rettig in a recent statement. "Given planning for the upcoming tax season and ongoing work on the inventory of tax returns filed earlier this year, this penalty relief deadline of September 30 strikes a balance. It is critical to us to not only provide important relief to those affected by the pandemic, but this deadline also allows adequate time to prepare our systems and our workstreams to serve taxpayers and the tax community during the 2023 filing season."

Service may be part of the IRS's official name, but the tax agency has been lacking in this area, especially over the past couple of years. It's not all the IRS's fault. Credit the perfect storm of the COVID-19 pandemic, lots of stimulus-related tax law changes passed by Congress for the IRS to administer, years of budget cuts, and a shrunken workforce. All of these, plus other factors, has helped lead to the IRS's backlog of millions of unprocessed returns and delayed tax refund payments.

The good news is that the IRS has made progress on its processing of returns, in part because it went on a hiring spree and shifted current personnel from other areas to assist with the backlog. Agency statistics from 2021 and 2022 demonstrate the forward movement made by the IRS. As of June 25, 2021, there were 16.7 million 2019 and 2020 1040 forms that still required manual processing. As of this summer, the IRS finished processing all individual returns it received in 2021 that had no errors, including 2020 e-filed and paper forms.

The bad news is that the IRS still has a backlog of millions of unprocessed 2021 returns that were filed this year, the vast majority of which are paper-filed returns. As of July 29, it had 10.2 million unprocessed 2021 individual returns. Of these, 1.8 million returns require special handling, such as error correction, and 8.4 million are paper 1040s waiting to be processed and reviewed. And there are very, very long waits for tax refunds. Refunds on paper-filed returns, which the IRS usually pays to filers within six to eight weeks in normal years, are taking four months or longer to be paid. The IRS says it will get through its backlog of unprocessed returns by year-end, but this isn't much relief to people who are still awaiting tax refunds on their 2021 returns that they filed months ago.

So, what steps can you take if you filed a return earlier this year and are still waiting for your refund? You can check the IRS's "Where's My Refund" tool on its website. Unfortunately, this tool provides limited information to filers seeking the status of their tax refunds. It will only let you know whether the IRS received the return and if it's still being processed, whether a refund was approved, and when it was sent. It doesn't say whether return processing has been suspended because of a math error or for another reason. The IRS continues to direct Form 1040 filers who are awaiting delayed tax refunds to the Where's My Refund tool for status updates. And filers dutifully check the tool for months on end, but this is obviously frustrating for people who see only a notice that the return is received or in process, but nothing on the status of their tax refunds.

You can try to call the IRS to check on your refund, but there is no guarantee that you'll even get through to a live person on its toll-free phone line. Even if you do get through, the operator may not be able to give you any more information other than what you can see for yourself on the Where's My Refund portal. You might have better luck calling if it's been at least six months since you filed your 2021 paper return.

If you've contacted the IRS about your delayed refund with no results, and not having the money is causing you a financial hardship, you can try calling the IRS's Taxpayer Advocate Service. Unfortunately, TAS can't assist with delayed refunds in most situations, but this is an instance in which it can still be of help.

Another suggestion is to contact your congressional representative. This might sound like a long shot, but we've heard from some people who had success doing this. Much of it depends on how helpful and knowledgeable the congressional aide answering the phone is on this topic. If your representative happens to sit on the House Ways & Means Committee, that's a plus.

A couple of things you should not do: Don't write to the IRS regarding your late tax refund. The IRS is already behind on opening and answering paper correspondence, and your letter will just fall to the bottom of the pile. Also, don't file a second return or an amended return for 2021. This will only confuse the IRS and delay your refund even longer.

At a time when many Americans are paying more for everything from gas to ground beef, tax refunds will provide much-needed cash for many families. And this year, those refunds could be particularly generous.

Through March 25, the average federal tax refund was $3,337, up 12.8% from the same period last year, according to the IRS. In 2021, the average refund was $2,959 by the same date.

People who expect a big refund tend to file early, so the average for the 2022 tax season may be lower. Still, there are several reasons many taxpayers could get a larger refund this year. Taxpayers who were eligible for a third Economic Impact Payment and didn't receive a check, or received less than the full amount, will have the opportunity to claim the recovery rebate credit when they file their 2021 tax return. The credit is worth up to $1,400. Likewise, taxpayers who were eligible for the expanded child tax credit, worth up to $3,600 in 2021, will have an opportunity to claim it when they file their 2021 tax return.

The IRS sent out advance child tax credits in six monthly payments last year, but not everyone who was eligible for the payments received them. If you had a newborn last year, for example, you didn't receive the advance credits because the IRS didn't have a record of the addition to your family. But when you file your 2021 tax return, you'll be able to claim the credit.

Young adults may also receive a larger-than-expected refund this year because of a provision in the American Rescue Plan that expanded the earned income tax credit, which is designed to help low- and moderate-income workers. The legislation expanded eligibility for the credit to include workers between age 19 and 24 who don't have children.

Investing Your Tax Refund

Nearly 60% of taxpayers expect to receive a refund this year. If you're interested in investing all or part of your money, many brokerage firms will allow you to open an account for less than $500, and some have no minimum requirements. Coinbase, an online platform for cryptocurrency investors, says taxpayers who file their returns using TurboTax can have their refunds converted into Bitcoin, Ethereum or one of the other cryptocurrencies the company supports.

Cryptocurrencies are extremely volatile. Risk-averse investors may want to invest their refunds in Series I bonds. I bonds issued from November 2021 through April 2022 yield a composite rate of 7.12%. You can buy up to $10,000 each year in electronic I bonds and apply your tax refund to purchase up to $5,000 in paper bonds.

Finally, although it's nice to get a check from the IRS, there are more-effective ways to use your money than giving the government an interest-free loan. The IRS offers a tool on its website that you can use to adjust your withholding.

Are you getting a federal tax refund this year? If so, don't think it has to go into an ordinary checking or savings account at your bank. Or that it all must go into just one account. You actually have several options when it comes to where you want the IRS to deposit your money. It can go into a number of different types of accounts, be split into more than one account, or even be used to buy savings bonds. It's all up to you – and it's pretty easy to send your tax refund in different directions.

First, you can split up your refund and have it directly deposited into as many as three different accounts. It can be done electronically if you e-file your tax return – just follow your tax software provider's instructions. If you file a paper return, use Form 8888 to let the IRS know how much you want to go to each account. You can even split your refund between direct deposit and a paper check using Form 8888. (We recommend using direct deposit to get your tax refund faster.)

Split deposits don't have to be in equal amounts, either. You can divide your refund any way you want. Any you can also send payments to up to three different financial institutions. If you're married and filing a joint account, you can direct your refund to your account, your spouse's account, or a joint account. (We recommended checking with your bank first before directing a joint refund to an individual account to make sure they'll accept it.)

You're also not limited to basic check and savings accounts when it comes to refund direct deposits. You can have all or some of your refund deposited into a:

• Traditional IRA, Roth IRA, or SEP IRA (but not a SIMPLE IRA);
• Health savings account (HSA);
• Archer MSA;
• Coverdell education savings account (ESA);
• TreasuryDirect online account to purchase Treasury securities; or
• Reloadable prepaid debit card or mobile app.

Just make sure the financial institution accepts electronic deposits.

(Here's a tip: If you're depositing refund money into an IRA, first check with the bank or other financial institution where the account is established to make sure your direct deposit will be accepted. Also let the trustee or custodian of your account know the year to which the deposit should be applied. Keep the annual IRA contribution limits in mind, too.)

You can also use your refund to buy up to $5,000 of U.S. Series I savings bonds (the amount you purchase must be divisible by $50). You can buy bonds for yourself, your spouse, or someone else. Use Form 8888 to buy bonds.

What If Something Goes Wrong?

How will you tax refund direct deposit requests be handled if something goes wrong? If there are any delays in processing your return, the IRS will deposit the entire refund in the first account listed on Form 8888. So, make sure the first account is the account you would want the whole refund deposited into if there is a delay.

If your bank or other financial institution rejects one or two, but not all of your direct deposit requests, you may get part of your refund as a paper check and part as a direct deposit.

If you made mistake (e.g., a math error) on your return and the amount of your refund is increased by the IRS as a result, the additional amount will be deposited to the last account listed. Likewise, if your refund is decreased because of an error, the decrease will be taken first from any deposit to the third account listed, then (if necessary) from the deposit to the second account listed, and finally (if necessary) from the deposit to the first account listed.

If the IRS "offsets" your refund (i.e., takes some or all your refund to pay a debt you owe) because you owe past-due federal taxes, the amount you owe will first be deducted first from any deposit to the third account listed, then (if necessary) from the deposit to the second account listed, and finally (if necessary) from the deposit to the first account listed. However, if you owe state income tax, child or spousal support, student loan debt or other debts subject to an IRS offset, the amount you owe will be deducted first from the deposit to the account with the lowest routing number. If any debt is still owed, it will be deducted from the deposit to the account with the next lowest routing number and then from the deposit to the account with the highest routing number. The IRS will send you a letter explaining any adjustments to your refund amount and direct deposits.

Also note that, if a deposit is changed due to a math error or offset, and the account is subject to contribution limits (e.g., an IRA, HSA, Archer MSA, or Coverdell ESA), or the deposit was deducted as a contribution to a tax-favored account on your tax return, you may need to correct your contribution or file an amended return.

If you're purchasing savings bonds, the bonds won't be issued if your refund is decreased because of a math error or offset for any reason. Instead, you'll get a paper check for your tax refund.

What's the Status of Your Tax Refund?

If you want to track the status of your tax refund, use the IRS's "Where's My Refund" portal. This online tool, which is updated each night, lets you know if the IRS has processed your return and sent your refund.

You can find the portal on the IRS website. To access the tool, enter your Social Security number (or individual taxpayer identification number), the filing status used on your 2021 tax return, and the amount of your refund (you need the exact amount).

Once you're in, the portal will show a message confirming that your refund was split after it is paid. The tool won't specify the amount deposited into each account, but it will provide an estimated date of the deposits and the amount of any adjustment.

If you purchased savings bonds and the portal says the IRS processed your refund and placed your bond order, you can call the Treasury Retail Securities Services at 844-284-2676 to ask about the status of your bonds.

If you're expecting a federal tax refund this year, you could get your money back in as little as three weeks. Historically, the IRS has issued over 90% of refunds due in less than 21 days. But this year could be different. Because of COVID-related disruptions, the IRS entered this tax filing season with millions of unprocessed tax returns from previous years. That's going to slow them down and potentially delay your refund. Fortunately, there are a few things you can do to speed up the process and increase the odds of getting your tax refund quickly.

The first trick is to file your return as early as you can. The sooner you file your tax return, the sooner you'll get any tax refund due. That's because your return will be closer to the front of the line, rather than towards the back.

If you want to speed up the refund process even further, e-file your tax return. Paper returns slow things down considerably. There are a number of ways to file electronically. Of course, you can find a professional tax preparer to file an electronic return for you (most expensive route). Seniors, people earning $58,000 or less, disabled people, and taxpayers with limited English-language skills may also qualify for free tax assistance and e-filing through the IRS's Tax Counseling for the Elderly and Volunteer Income Tax Assistance programs. There are also several e-filing options for the "do it yourself" crowd, such as using a commercial tax software product (e.g., TurboTax) or forms/software on the IRS website. If your 2021 adjusted gross income is $73,000 or less, you can even file your federal return for free!

TIP: To file your tax return electronically, you'll have to sign and validate the return by entering your prior-year adjusted gross income (AGI) or your prior-year Self-Select personal identification number. If the IRS hasn't processed your 2020 tax return yet, enter $0 for your prior-year AGI. If you used the IRS's Non-Filers tool last year to register for monthly child tax credit payments or a third stimulus check, enter $1 as your prior-year AGI.

Finally, make sure you select the direct deposit payment method for your refund. Just like paper returns, paper checks take much longer to process. It's also the fastest and most convenient payment option (no trip to the bank needed). Plus, there's always the chance that a paper check could get stolen or lost in the mail.

Tax Refund Delays Can Still Happen

Even if you file early, file electronically, and request direct deposit, it still takes more time for the IRS to process some tax returns. If that happens, your refund could be delayed. Process delays should be expected if your return:

• Includes errors;
• Is incomplete;
• Is affected by identity theft or fraud;
• Includes Form 8379, Injured Spouse Allocation (which could take up to 14 weeks to process); or
• Needs further review in general.

The IRS will contact you by mail if they need more information to process your return.

Also, by law, refunds for returns claiming the earned income tax credit or the additional child tax credit must be delayed. They can't be issued before mid-February. This applies to the entire refund, not just the portion associated with the credits. However, for 2022, the IRS said these refunds should start being paid by March 1 if direct deposit is chosen and there are no other issues with the tax return (some people may have received refunds a few days earlier).

If you're a non-resident alien filing Form 1040-NR who is requesting a refund of tax withheld from U.S. source income, you should allow up to 6 months from the original due date of the 1040-NR return or the date you filed the form, whichever is later, to receive any refund due.

Tracking Your Tax Refund

The IRS has a handy online tool that lets you track the status of your tax refund. It's called the "Where's My Refund" portal, and it will tell you if the IRS is processing your return, getting ready to send your refund, or has already sent you your money. The tool is updated daily.

The portal is located on the IRS website. You'll need your Social Security number (or individual taxpayer identification number), the filing status used on your 2021 tax return, and the exact amount of your expected refund to access it.

The sooner you file your tax return, the sooner you'll receive any refund due. That's why some people like to file their return as early as possible. This year, the IRS will start accepting 2021 tax returns on January 24, 2022. That's much earlier than last year, when you had to wait until mid-February to start filing returns.

If you're really itching to file your return as soon as possible and made $73,000 or less in 2021, you can use the IRS's Free File program to file your return as early as January 14. Participating providers will accept completed returns starting on that date and hold them until January 24, when they can be filed electronically with the IRS. Other tax preparation software companies and tax professionals may also accept or preparing tax returns before January 24 and hold them until the IRS itself begins accepting returns.

If you're more of a procrastinator when it come to taxes, most people have until April 18, 2022, to file your 2021 federal income tax return or request a filing extension. Normally the due date is April 15, but since that day is a holiday in Washington, D.C. (Emancipation Day), the deadline is pushed back to the next business day, which is April 18. However, if you live in Maine or Massachusetts, you get an extra day to file your federal return – until April 19 – because of the Patriots' Day holiday in those two states. Anyone requesting an extension will have until October 17, 2022, to file their 2021 federal income tax return (although payment of any tax owed is still due on the April 18 or 19 deadline).

Who Must File a Tax Return?

Not everyone is required to file a tax return. If your income is under a certain amount (see table below), you aren't required to file a tax return because you won't owe any tax.

Federal Tax Return Filing Requirements (2021 Tax Year):

However, even if your income is below the applicable threshold, you still may want to file a 2021 tax return anyway. For example, you will need to file a return to claim a recovery rebate credit if you didn't get a third stimulus check or got less than what you should have received. There also may be other tax credits that are only available if you file a return, such as the:

• Earned income credit;
• Child tax credit;
• American Opportunity credit;
• Credit for federal tax on fuels;
• Premium tax credit;
• Health coverage tax credit;
• Credits for sick and family leave; and
• Child and dependent care credit.

If you receive monthly child tax credit payments last year, you'll have to reconcile those payments with the total credit that you're actually entitled to claim. (Some people may even be required to pay back all or some of the monthly payments if they received too much.)

When Will Tax Refunds Arrive?

If you have a federal tax refund coming, you could get your money back in as little as three weeks. In the past, the IRS has issued over 90% of refunds in less than 21 days. If you want to speed up the refund process, e-file your 2021 tax return and select the direct deposit payment method. That's the fastest way. Paper returns and checks slow things down considerable.

However, don't expect your refund before mid-February if you claim the earned income tax credit or the additional child tax credit. By law, refunds for returns claiming these credits must be delayed. This applies to the entire refund, not just the portion associated with the credits.

The average federal tax refund so far this year is $3,103 – up 8% from the same period in 2021. But instead of using the money for a summer vacation, many people who are struggling with rising inflation will need to use their refunds to pay for gas and groceries.

If you're fortunate enough to have the essentials covered, you may be tempted to treat yourself to dinner at your favorite restaurant or a nice bottle of wine. Fine. But once you've scratched that itch, consider these ways to put the rest of your tax refund to work for you.

Even if you're fully employed now, there's no guarantee that your hours won't be cut, your salary reduced, or your job eliminated down the road. That means it's more important than ever to have money set aside for emergencies. That way, you won't have to run up credit card debts or raid your retirement savings to pay the bills until you get back on your feet.

Aim for six months of living expenses — more if you're the sole provider for your family. Interest rates are still low right now, but you can eke out higher rates by putting your savings in an online bank account. Look for one with no minimum balance requirement or monthly fees.

In an effort to curb inflation, the Federal Reserve is expected to hike short-term interest rates several times this year, and that means credit card rates will rise, too. The average credit card interest rate is already a hefty 16.36% as of April 20, 2022, according to CreditCards.com. Pay off your unpaid balances and you'll get a return on your investment a successful hedge fund manager would envy. If you're able to pay off the entire balance, you'll also eliminate a monthly expense, which will give you some breathing room if you lose your job.

If you have a Roth or traditional IRA, consider putting some of your refund money in the account now so you'll have more money when you retire. If you don't already have an IRA, think about getting one. The maximum amount you can contribute to your IRAs in 2022 is $6,000 — $7,000 if you're 50 or older — so you can stash your entire refund there if you don't need it for anything else.

If you're not inclined to build your own portfolio, consider investing in a target-date fund, which will invest in a mix of stocks and bonds, based on how many years you're away from retirement.

Contributions to a 529 college savings plan grow tax-free, and withdrawals aren't taxed if you use them for qualified expenses, such as college tuition and room and board. You can invest all or a portion of your tax refund — 529 plans typically have very low minimums. Plus, your state may give you a tax deduction or credit if you invest in your own state's plan. If your children are young, you have many years for investments in the plan to compound and grow. To research plans, go to savingforcollege.com.

If you have a high-deductible health insurance plan (a deductible of at least $1,400 for single coverage or $2,800 for family coverage), you can contribute to a health savings account. An HSA gives you a triple tax break — your contributions are tax-deductible (or pre-tax if through your employer), the money grows tax-deferred, and you can use it tax-free to pay out-of-pocket medical expenses in any year (there's no use-it-or-lose-it rule).

The CARES Act increased the types of expenses that are eligible for tax-free withdrawals from your HSA. In addition to health insurance deductibles, co-payments, prescription drugs and medical expenses that aren't covered by your insurance, you can use tax-free withdrawals to pay for most over-the-counter medications and feminine-hygiene products. Although health-insurance premiums are typically not considered qualified medical expenses, there's an exception if you use withdrawals to pay COBRA premiums or for other health-insurance premiums if you're collecting unemployment benefits.

Hurricane season is almost here, so if you live in a vulnerable area, consider using your refund money to protect your home. A home generator will keep the lights on and the food cold during a power outage. A 6.5 kw portable home generator costs about $800 to $1,000. You also can use the money to pay someone to trim your trees, which will help protect your home from some of the most common types of storm damage.

If the COVID-19 pandemic still has you working from home, you're probably well aware by now of the inadequacies of your home office. Use your refund to buy a standing desk — the Uplift V2 can be customized for a wide range of heights and retails for about $550. Is your back acting up? Maybe you need a new chair. The Alera Elusion Mesh Mid-Back Swivel/Tilt Chair, which retails for about $160, features a contoured seat cushion that's designed to relieve pressure on your legs.

The IRS is looking for about 1.5 million people who didn't file a 2018 tax return and who might be owed a refund of taxes that were withheld or otherwise prepaid. In fact, Uncle Sam has almost $1.5 billion of potential refunds waiting to be claimed. The median potential refund is estimated to be $813. Is any of that money yours?

Claim Your Refund By April 18

Act now if you think some of that cash could belong to you. In cases where a federal tax return was not filed, the taxpayer generally has a three-year window of opportunity to claim a refund. That means you must file your 2018 tax return with the IRS no later than this year's tax filing deadline to collect the money. For most people, that's April 18 (April 19 for residents of Maine or Massachusetts). If you don't file a 2018 return in time, the U.S. Treasury gets the money and you're out of luck.

Missing W-2 and Other 2018 Tax Forms?

If you're missing W-2, 1098, 1099 or 5498 forms from 2018, try getting copies from your employer, bank or other payer. If that doesn't work, you can go on the IRS website and order a free wage and income transcript or request one by filing Form 4506-T. The transcript will show data from information returns received by the IRS. This information can be used to file your 2018 tax return.

What If You Have a Tax Debt or Didn't File Other Returns?

The IRS could hold your 2018 refund check if you didn't file a 2019 or 2020 return, either. In addition, the IRS may also apply your 2018 refund to any federal or state taxes you owe for other years — or to offset unpaid child support or past due federal debts, such as student loans.

Eligibility for 2018 Earned Income Tax Credit

By filing a 2018 tax return, many low- and moderate-income workers may also be eligible for the earned income tax credit for that year. The credit was worth as much as $6,431 for 2018. The credit helps individuals and families whose incomes are below certain thresholds. The thresholds for 2018 were:

• $49,194 ($54,884 if married filing jointly) for people with three or more qualifying children;
• $45,802 ($51,492 if married filing jointly) for people with two qualifying children;
• $40,320 ($46,010 if married filing jointly) for people with one qualifying child; and
• $15,270 ($20,950 if married filing jointly) for people without qualifying children.