As the tax season unfolds, the majority of taxpayers find themselves eagerly awaiting refunds, a financial reprieve that has become a customary expectation. Last year, the Internal Revenue Service (IRS) issued refunds to nearly two-thirds of filers, totaling $334.9 billion. Despite the common perception of tax refunds as a byproduct of overpaid taxes, they continue to play a significant role in the financial landscape.
Reasons behind tax refunds vary, with some attributed to overwithholding and others linked to eligibility for refundable tax credits such as the Earned Income Tax Credit, premium tax credit, or the child tax credit. Additionally, specific payments subject to mandatory withholding and the intricacies of financial situations contribute to the diverse scenery of tax refunds.
Tax Refunds Coming to Millions of Americans
While tax professionals often caution against viewing refunds as interest-free loans to the IRS, some taxpayers consider them a forced savings plan. The idea of using the refund to pay down debt or make substantial purchases appeals to those who perceive it as a unique financial strategy. As of the latest data available from 2023, the average tax refund amount was $2,306 for direct deposit refunds.
The landscape of taxpayer attitudes toward refunds is further highlighted by an analysis of Google search volume by LLC.org. Their findings indicate that residents in southern states, particularly Mississippi, Georgia, and Alabama, are more “refund eager” than others. Cities like Mobile, Alabama, lead the charge in conducting searches related to tax refund status.
In the current tax year of 2024, refund trends have taken a slightly different turn. The IRS has issued 2,616,000 tax refunds as of February 2, 2024, representing a significant decrease from the same period in the previous year. The average refund size has also experienced a noteworthy decline.
While the IRS aims to issue the majority of refunds in less than 21 days, certain factors, such as the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC), can influence the timing. For early filers eligible for these credits, the projected deposit dates begin on February 27, 2024, assuming direct deposit is selected and no other issues are present.
“Where’s My Refund?” Tool by the IRS
For those filing amended returns or paper returns, the timeline for refunds extends to four weeks or more, depending on necessary corrections and additional reviews. To check the status of their refunds, taxpayers can use the “Where’s My Refund?” tool on IRS.gov or the IRS2Go mobile app.
The IRS has developed the “Where’s My Refund?” tool to aid taxpayers in monitoring the status of their tax refunds. This user-friendly tool offers insights into the progress of your refund, highlighting any potential delays or issues causing the hold-up. To access details about your refund, simply input your Social Security number, last name, and the tax year.
Additionally, the tool provides options to submit supplementary information or get in touch with the IRS for further assistance. It’s crucial to remember that this tool is designed for taxpayers who have already filed their tax returns and are eagerly awaiting their refunds.
To use the “Where’s My Refund?” tool by the IRS, visit the IRS website or open the IRS2Go app. Look for the tool on the main page and enter your Social Security number, last name, and the tax year you want to check. Click the “Submit” button to get the information, then review the status and any messages about your refund. If there’s a delay, the tool will explain the reason and suggest steps to resolve it. You also have the option to submit additional information or contact the IRS for further assistance.