Tax Refunds Shrink in 2023

Tax Refund | Image by Derek Hatfield/Shutterstock

The Internal Revenue Service (IRS) is forecasting a steep drop in the value of individual tax refunds this year.

In February, the IRS issued a notice to taxpayers that the agency’s early filing statistics indicated a roughly 11% drop in the dollar amount of individual tax refunds. Based on the agency’s more recently published statistics comparing March 18, 2022, to March 17, 2023, the trend has continued well into tax season.

The average individual income tax return based on the 12-month period fell from $3,305 to $2,933, a drop of 11.3%, or roughly $372. So far, the total amount refunded during this year’s tax season is $158 billion, a more than 7.5% decrease from the $171 billion refunded in 2022.

As of March 17, the IRS had received 71.86 million tax returns, of which the agency had processed approximately 71.45 million. For those processed returns, the agency issued about 53.91 million individual refunds, 4.1% more than it issued at the same point a year earlier.

The agency sent a notice on the matter as early as November, cautioning taxpayers to expect smaller refunds. The agency explained that individual “taxpayers would not receive an additional stimulus payment with a 2023 tax refund because there were no Economic Impact Payments for 2022.”

Some of the tax credits that resulted in higher tax returns last year include the Child Tax CreditEarned Income Tax Credit, and Child and Dependent Care Credit.

The IRS also warned that taxpayers who do not itemize and take their standard deduction will be precluded from being able to deduct their charitable contributions.

For individuals having trouble filling out their 2023 taxes, the IRS suggests reaching out to a trusted tax professional.

“Most tax professionals offer excellent advice and can really help people navigate complex tax issues. But we continue to see instances where taxpayers are ‘ghosted’ by unscrupulous tax preparers with bad advice who quickly disappear,” said IRS Commissioner Danny Werfel, per a March 27 news release.

“We [at the IRS] encourage taxpayers to check out the tools and resources available to them to ensure they find the right tax professional for their needs,” Werfel said.

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1 Comment

  1. Bret

    I thought that Biden was increasing taxes on people with an income over $400k But the average return is less than $3k. And these same people who are happy with a $3000 return will have to spend part of it for a tax professional bc the tax laws are to stupidly complex for anyone to understand. You can take your yearly income info to 10 tax professionals and you will get 10 different returns. Not sure if republicans are the solution but we know that democrats are the problem.


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