With the 2023 tax season well underway, the Internal Revenue Service is providing an early peek at the typical refund amount taxpayers can expect to receive.
The IRS said this week that it has issued about 8 million refunds as of Feb. 3, worth a collective $15.3 billion. The average refund check so far this year is worth $1,963 – about 11% lower compared with the same time last year.
That is in line with an earlier warning from the IRS for taxpayers to brace for a smaller refund this year because there were no stimulus payments delivered by the federal government in 2022. In 2021, the IRS delivered a third round of stimulus payments worth up to $1,400 per person. Eligible Americans could claim unpaid funds on their tax return.
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"Refunds may be smaller in 2023," the IRS said in a November news release about preparing for the upcoming tax season. "Taxpayers will not receive an additional stimulus payment with a 2023 tax refund because there were no economic impact payments for 2022."
Taxpayers typically receive a refund if they had too much money withheld and overpaid their taxes the previous year. For many families, the money can be substantial: Nearly three-quarters of filers received a tax refund in 2022, with an average payment worth about $3,176 – up from about $2,800 in 2021.
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The decrease in refund size can be concerning to millions of Americans who depend on the influx of money from Uncle Sam to make major purchases, save for retirement or pay off debt. In 2022, nearly half – 46% – of taxpayers said they relied on their refund to help cushion their finances, according to a LendingTree survey.
"These tax refunds can help folks build that cushion up again, protecting them from needing to rely on credit cards and other loans for a while longer," LendingTree chief credit analyst Matt Schulz said at the time.
The IRS has received about 19 million returns this year, an increase of about 30% from the year-ago period. That could be because "individuals are filing their returns sooner this year to get refunds faster given the tougher economic environment," according to Bank of America analysts.
Americans have been coping with the worst inflation spike since the 1980s; although consumer prices have stopped accelerating relentlessly, they still remain about three times higher than the pre-pandemic average.
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The tax-filing season ends Tuesday, April 18 this year.
Even if you receive an extension from the IRS to file your taxes, you still must pay any money owed to Uncle Sam by April 18 or face penalties and interest on any amount not paid.
