Rosalind Evans
As the tax deadline draws near, the Internal Revenue Service (IRS) has already processed an impressive number of tax refunds, marking a significant period for American taxpayers. The agency has issued over 43 million refunds totaling nearly $135.3 billion, highlighting an active start to the tax season. Notably, the average refund amount has increased to $3,145 from $2,972 in the previous year, as reported by the IRS. This rise in average refunds underscores millions of Americans’ financial expectations and planning. However, this figure is subject to change, given the IRS anticipates receiving many more returns before the close of the filing season.
The statistics reflect a broader trend of taxpayer behavior, with many opting to file early in anticipation of refunds. Managing director at CBIZ Marks Paneth, Mark Baran states, “Typically, taxpayers file sooner when they’re expecting a refund.” This sentiment is echoed in the reasons many Americans delay filing their taxes, with the anticipation of not receiving a refund being a significant factor. Moreover, filing for extensions, allowing taxpayers until October 15 to file their returns, demonstrates the strategic approaches employed by individuals, particularly those with complex financial portfolios awaiting specific tax forms like Schedule K-1.
In the context of economic factors influencing taxpayer reliance on refunds, inflation emerges as a critical element. A LendingTree survey indicated that the increase in taxpayers depending on refunds, from 36% last year to 40% this season, is attributed to the lingering effects of inflation. Despite a decrease from its peak, inflation rates continue to hover above the Federal Reserve’s target, affecting individuals’ financial planning and expectations across the country.
As the filing season progresses, the IRS’s ongoing efforts to process returns and issue refunds play a crucial role in the financial well-being of many Americans. While the average refund amounts provide a snapshot of the current economic landscape, the full impact of this tax season will unfold as more returns are processed. The anticipation of refunds, the strategic use of filing extensions, and the economic backdrop of inflation paint a complex picture of this year’s tax season, underscoring taxpayers’ diverse financial realities.
As we navigate the remainder of the tax season, the data and trends observed so far offer valuable insights into American taxpayers’ financial behaviors and expectations. With many still awaiting to file their returns, the coming months will further reveal the intricacies of this annual financial ritual, highlighting the importance of understanding and adapting to the ever-changing economic environment.
