IRS has started to issue tax refunds; taxpayers believe they will receive smaller refunds compared to last year. The data from the tax agencies show that the concerns are real, and the IRS might issue a lesser amount to many individuals. CBS News reports that the average tax refund is around $2,300, while it was $2,800 the previous year. However, the IRS is yet to process millions of tax refunds, and figures might change. IRS issued 129 out of the 169 tax refunds in 2021; it has issued only 4 million refunds this year.
Inflation has caused enormous difficulties
Several taxpayers have filed their 2021 tax returns; they must file the returns by April 18. The tax refunds help families pay off debts and cover additional costly expenses. Millions of low and middle-income families rely upon tax refunds. The inflation rise has increased the problems of individuals; the reduced tax refunds will add insult to the injury. The federal government issued enhanced Child Tax Credit in the latter part of 2021, millions of low-income families benefitted from the program. The CTC payments will reform 2022’s tax structure. The CTC amount is lesser compared to the previous years.
Low-Income families are distraught
Several tax advisors have warned taxpayers of payment delays. IRS faces a severe backlog; it has a lot of unprocessed payments; it is still to process the 2020 tax returns. Individuals are apprehensive about the indefinite delays in the payments this year. CBS News quoted Joe Buhrmann, a CFP and senior financial planning consultant at eMoney Advisor; he said, “There are many households and families who count on that refund, especially those at the lower end of the income spectrum is a concern. The paused student loan repayment has been very positive, and the relief was nice, but at tax time, you aren’t writing off any student loan interest.”
IRS has announced that taxpayers will generally receive their tax refunds within three weeks of filing. However, the payment might witness delays in specific circumstances. IRS encourages taxpayers to file electronic returns to speed up the process. However, most choose paper checks.