Americans are getting a double-dose of bad news this tax season: Millions of people due for tax refunds this year are typically getting less money back, while the share of taxpayers who owe the IRS is rising.
The biggest issues this year are “refund disappointment and a balance-due surprise,” Mark Steber, chief tax information officer at Jackson Hewitt, told CBS MoneyWatch.
The typical refund for the 2022 tax year — with tax returns due by April 18 — is $2,878 through April 7, a decline of 9.3% compared with the same year-ago period, according to the latest tax data available from the IRS.
Meanwhile, about 43% of Americans said they expect to owe money on their federal tax returns this year, up three percentage points from the previous tax year, according to a survey of more than 2,200 participants by CivicScience.
What’s changed this tax season
The main reasons for the decline: the expiration of government pandemic tax benefits, such as stimulus checks, the expanded Child Tax Care (CTC) credit and other generous tax rebates. That means many Americans are getting smaller refunds, or could be stuck owing the IRS, at a time inflation continues to strain household budgets.
“The stuff put into place in the prior years for the pandemic — the CTC, dependent credit, earned income tax credit if you’re single, and other benefits — they really juiced up the tax credits last year,” Steber said. “Now that’s reverted.”
He added, “A lot of people used last year as a roadmap for what they should expect. Any deviation from that is sure to disappoint.”
To be sure, millions of Americans have yet to file their taxes. The IRS said it expects about 168 million tax returns to be filed this year for the 2022 tax year; as of April 7, the agency said it has received about 101 million filings.
Many taxpayers wait until the last minute to file their returns, while millions request an a filing extension each year. The latter gives taxpayers an extra six months to file their return, although the extension doesn’t give people more time to pay the IRS if they are on the hook for unpaid taxes.
“Last year was kind of a boom year,” Steber noted. “This year is kind of a normal year, and that’s a lowering of satisfaction when compared to expectations. We’ve explained to our clients, it’s really more a normalization — don’t be shocked.”
—With reporting by CBS News’ Irina Ivanova.
