Will Your IRS Refund Be Less This Year?
Data show federal tax refunds are lower this year than last. Will you get less money back from the IRS in 2024?
![rendering of gold dollar sign next to a white question mark](https://cdn.mos.cms.futurecdn.net/xAp3jx9vVpijPDkAFMLUyZ-415-80.jpg)
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.
![https://cdn.mos.cms.futurecdn.net/hwgJ7osrMtUWhk5koeVme7-200-80.png](https://cdn.mos.cms.futurecdn.net/hwgJ7osrMtUWhk5koeVme7-320-80.png)
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
- 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
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Katelyn has more than 6 years of experience working in tax and finance. While she specialized in tax content while working at Kiplinger from 2023 to 2024, Katelyn has also written for digital publications on topics including insurance, retirement, and financial planning and had financial advice commissioned by national print publications. She believes knowledge is the key to success and enjoys providing content that educates and informs.
-
Visa Is the Worst Dow Stock Wednesday. Here's Why
Visa stock is down sharply Wednesday after the credit card company came up short of revenue expectations for its fiscal Q3.
By Joey Solitro Published
-
Another Analyst Moves to the Sidelines on Tesla Stock After Earnings
Tesla stock is spiraling Wednesday after the EV maker's big earnings miss and Wall Street has been quick to weigh in. Here's what you need to know.
By Joey Solitro Published
-
IRS Ends Inherited IRA Confusion: Annual RMDs Required for Many
IRAs The agency has resolved a major point of uncertainty for inherited IRA beneficiaries.
By Kelley R. Taylor Last updated
-
$145 Million in ‘Senior Freeze’ Checks Mailed
Property Tax What you need to know about New Jersey's property tax relief program for older adults.
By Kate Schubel Published
-
TaxAct Class Action Settlement: Details to Know
Tax Filing A multimillion-dollar settlement over alleged data privacy violations affects some TaxAct users.
By Kelley R. Taylor Last updated
-
An IRA Contribution Option You Might Not Know
IRAs Retirement savings might not have to take a back seat just because your partner doesn't earn income.
By Kelley R. Taylor Last updated
-
Project 2025 Tax Overhaul Blueprint: What You Need to Know
Tax Proposals Some people wonder what Project 2025 is and what it suggests for taxes.
By Kelley R. Taylor Last updated
-
The Taxes That Come out of Your Paycheck
Payroll Tax Your take-home pay is often less than expected due to several payroll tax withholdings you need to know.
By Kelley R. Taylor Last updated
-
Seven States Where Gas Tax Increased July 1
Gas Taxes Since July has arrived, drivers in several states are facing a gas tax hike.
By Kelley R. Taylor Last updated
-
401(k) Withdrawal Penalty Rule Changes for 2024
Tax Rules More people are taking early emergency withdrawals from retirement savings accounts. New rules might offer some relief.
By Kelley R. Taylor Last updated