2024 Tax Season Could Bring Fatter Refunds - Here's Why
By April Fowell
Potential good news for taxpayers: Larger refunds anticipated in 2024, with some individuals possibly receiving up to 10% more than the previous year.
Last year's average tax refund was $3,167, about 3% less than the prior year. However, inflation adjustments by the IRS in 2023, including a 7.1% increase in tax brackets, could result in improved refunds.
Despite inflation concerns, taxpayers whose income didn't keep up with inflation rates may see a better refund, with predictions of up to 10% based on modeling and IRS adjustments.
When government benefits from the pandemic-era expired last year and they received a lesser tax return check, many Americans were taken aback. What the public may anticipate this year is a question that is raised by that unpleasant revelation.
The good news: According to Mark Steber, chief tax information officer at Jackson Hewitt, many may receive larger refunds this year; some may receive 10% more than they did the year before.
IRS records show that last year's average tax refund was $3,167, or about 3% less than the previous year's. Comparatively, in 2022, when taxpayers got large tax credits including the enhanced Child Tax Credit, the average refund check increased by 15.5% to over $3,300.
For many Americans, the reduced tax refund in 2023 proved to be a double blow because they were also experiencing severe inflation, which reduced their purchasing power. Tax refunds, which typically exceed an average worker's salary, are a household's largest yearly cash infusion and are frequently used to increase savings or pay off debt.
How Inflation Affects Taxpayers
Ironically, tax experts suggest that inflation could work in favor of taxpayers this year. The IRS's 2023 adjustments, factoring in inflation, led to a more generous standard deduction and a 7.1% increase in tax brackets-an unusually substantial adjustment.
Mark Steber stated, "Say your income didn't keep pace with inflation... you could see a better refund. We are predicting a higher refund for those people, up to 10%," based on modeling using last year's tax refund data and IRS inflation adjustments.
The Bureau of Labor Statistics estimates that in 2023, the median worker's pay increased by around 5.5%. That's less than the 7.1% inflation adjustment that the IRS applied to a number of tax provisions in the previous year.
Using a 2024 tax refund calculator, which is provided by financial websites like Nerdwallet and tax preparation firms like H&R Block, is one method to find out how much money you will get back.
Naturally, some people will not receive larger tax returns. Furthermore, Steber noted that more taxpayers would owe money this year since more people took on side jobs last year to offset rising expenses. He pointed out that some of them might not have paid their quarterly self-employment taxes and might owe the IRS on April 15.
He pointed out that those whose earnings didn't keep up with inflation may receive a larger return, as would homeowners who took advantage of the extended home energy tax credits.
If the Earned Income Tax Credit is increased, low-income families with children may also receive larger refunds. The maximum credit has increased from $6,935 to $7,430 for the 2023 tax year.
However, Jaeger cautioned that Social Security recipients could have to pay more in taxes. The reason for this is that the Social Security tax threshold that retirees must pay taxes on has not been updated for inflation and has been at the same level since 1984.
When Will You Get Your Tax Refund
The 2019 tax filing season will begin on January 29 with the IRS, and filers will have until April 15 to complete their taxes. You can ask for an extension if you want additional time, in which case you have until mid-October to submit.
Due to state holidays, residents of Maine and Massachusetts have until April 17 to submit their taxes; moreover, those residing in regions designated as federal disaster zones may be granted an extension.
Refunds to most taxpayers arrive in a span of 21 days. Individuals who submit on January 29th or earlier should get their payouts by February 19th.