With only few weeks left until the April 18 federal deadline, the clock is ticking on tax season, and there are still millions of taxpayers who have not submitted their annual returns to the IRS. The initial returns that have been filed with the IRS offer some indications about what to anticipate this year, including processing times and refund amounts.
Based on the most up-to-date information, the IRS anticipates approximately 168 million households or individuals to submit their tax this year. This implies that roughly 7 out of 10 taxpayers will be submitting their returns to the IRS in the coming weeks. For those who haven’t filed yet, here’s what you should be aware of, taking into account the advice of tax experts and IRS data.
It’s probable that your tax refund will be 10% less
Tax professionals and the IRS had cautioned ahead of tax season that refunds were likely to be reduced this year as a result of the discontinuation of pandemic-related benefits, such as stimulus payments and the extended Child Tax Credit. Now, with the IRS having gathered data for several weeks since this year’s tax filing began on January 23, it’s evident that tax refunds have decreased by an average of 10% this year.
According to IRS data, the average tax refund this year is approximately $3,170, which is lower than the $3,529 recorded during the same period last year.
Tax returns are being processed more quickly this year
Over the past three tax seasons, the pandemic-induced delays caused millions of tax returns to be held up in the IRS system, resulting in delayed refunds and financial stress for numerous taxpayers. However, both the IRS’s own data and tax experts indicate that returns are being processed more swiftly this year. As of the most recent available data on Feb. 24, the tax agency had received roughly 46 million tax returns, representing a 1.3% increase from last year, and had processed 45.7 million of them, reflecting a 4.3% rise from the previous year.
According to experts, the IRS has made efforts to recruit new agents and customer service personnel, resulting in a reduction of some of the issues encountered in previous years. According to Keith Hall, a Certified Public Accountant (CPA) and CEO of the National Association for the Self-Employed, an organization that represents small business owners, “the response time and customer service time have both improved.” He added that “the IRS has significantly enhanced the service aspect of their operations so far.”
It’s important not to disregard credits and deductions
Although pandemic-related benefits like stimulus checks and the extended Child Tax Credit have largely expired, there are numerous deductions and credits that taxpayers should not disregard. For example, the Child Tax Credit still exists in its pre-pandemic format, providing up to $2,000 per child below the age of 17.
Furthermore, parents with older children in college who qualify can claim education-related tax benefits, such as the American Opportunity Tax Credit and the Lifetime Learning Credit, although only one can be claimed per child. The former can be worth up to $2,500, while the latter can be up to $2,000. Low- or middle-income taxpayers may be eligible for the Earned Income Tax Credit, which can provide up to $6,935 in tax credits.