Americans who filed their taxes earlier this year are noticing that their refunds are smaller than they had originally anticipated from the IRS.
This may be happening for a number of different reasons.
One reason could be that you made more money than you thought last year.
People’s lives were turned upside down during the pandemic, so it became hard to get used to the new normal.
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If you got a better job or raise, you may have been bumped into a higher tax bracket.
Other people are seeing much higher refunds than originally expected.
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As of Feb. 25, the IRS has already issued 29.7 million tax refunds.
The average refund is worth $3,473.
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This is a 15% increase from last year, where the refunds were worth around $3,021.
There is a major difference between last year and this year with accepting the returns.
Last year the IRS delayed accepting refunds until Feb. 12 due to COVID-19, and this year they were accepted much earlier on Jan. 24.
This year there were new tax breaks available to people that weren’t before, like the Earned Income Tax Credit.
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The income threshold was changed for that and you don’t need kids to claim it now.
Despite this, people are continually surprised by smaller refunds.
Some people who invest are seeing larger capital gains, which they need to pay taxes on.
In addition, the normal child tax credit is $2,000.
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While it was worth up to $3,600 this year, many parents already got the first half in 2021.
This means the most parents received the rest, which was $1,800, this time around instead of a full $2,000.
There was also no interest deductions for student loans since they were paused for two years.
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