IRS reporting smaller tax refunds so far in 2024

In the early stages of the 2024 tax season, American taxpayers are noticing a decrease in the size of their tax refunds, according to the Internal Revenue Service (IRS). The average refund amount issued by February 2 stands at $1,395, a drop from last year’s average of $1,963 at the same time. The delayed start of this year’s tax season on January 29, as opposed to January 23 in 2023, resulted in fewer refunds processed—2.6 million compared to nearly 8 million last year.

The IRS has reported a smooth start to the filing season, with all systems operating efficiently, despite the noticeable difference in refund amounts. Daniel Rahill, a CPA from Chicago, suggests several reasons for the smaller refunds: salary increases not matched by adjusted withholdings, underpaid estimated taxes by gig workers, and higher investment income taxes due to a robust stock market.

As the tax season progresses, the IRS expects to receive over 128.7 million individual returns by the April 15 deadline, with most filers traditionally receiving a refund. Taxpayers filing electronically and opting for direct deposit are likely to see their refunds within 21 days, while those submitting paper returns may wait longer. The IRS encourages taxpayers to use the “Where’s My Refund” tool for tracking refund status, as financial experts debate the advantages of larger versus smaller refunds.