The Internal Revenue Service (IRS) has recorded significant success in its effort to process tax refunds efficiently as the tax filing deadline is approaching. The IRS has given out more than 43 million refunds, amounting to nearly $135.3 billion. This money going back to taxpayers is a major milestone and a highlight of the 2023 tax season.
Surge in Average Refund Amounts
Reports as of March 8 indicate a notable increase in the average refund amount, which now stands at $3,145. This figure represents a rise from the previous year's average of $2,972 reported during the same week in 2023. The IRS has highlighted that the average refund amount might continue to vary as it processes additional returns. With the IRS receiving less than half of the projected 146 million individual returns expected this season, the final average refund amount remains to be seen.
Checking Refund Status Made Easy
Taxpayers eager to know the status of their refunds can utilize the "Where does the IRS provide My Refund?" online tool. This facility offers updates within 24 hours for electronically filed, current-year returns. Updates become available for those who submit paper returns four weeks after filing. This system streamlines the process for taxpayers, providing timely and crucial information as they plan their finances.
Why Delay Filing Taxes?
The decision to delay filing taxes varies among taxpayers. Mark Baran, a managing director at CBIZ Marks Paneth, explains that taxpayers expecting refunds typically file their taxes sooner. Conversely, the anticipation of not receiving a refund ranks amongst the top reasons for filing delays. January surveys from IPX1031, an investment property exchange service, echo this sentiment, shedding light on taxpayers' procrastination habits.
Extensions provide a lifeline for many, extending the federal filing deadline by six months to October 15. However, taxpayers must still meet the April 15 deadline for any federal taxes owed. Baran notes that extensions are particularly prevalent among high-net-worth clients awaiting additional tax forms, such as Schedule K-1 for pass-through business income.
Shifts in Refund Reliance
A survey from LendingTree published in March reveals an increase in the percentage of taxpayers relying on tax refunds. Forty percent of respondents indicated dependence on their tax refunds this season, an uptick from 36% in the previous year. LendingTree's senior economist, Jacob Channel, attributes this shift primarily to inflationary pressures. Despite a decrease from its 9.1% peak in 2022, inflation surpasses the Federal Reserve's 2% target. Compared to the previous year, the rise in the consumer price index by 3.2% in February highlights the ongoing financial strain on consumers.
As the countdown to the tax filing deadline continues, the IRS's efforts to process refunds efficiently offer a financial reprieve for many taxpayers. With millions benefiting from the payouts, the focus now turns to the remaining returns. The blend of accessible online tools, extensions, and economic factors paints a complex picture of this tax season, reflecting the varied experiences of American taxpayers.
