The IRS has sent 8 million tax refund checks so far. Here's the average amount.
With tax season in full swing, the IRS is offering a peek at early tax filings, and the number so far may bode ill for Americans hoping for a juicier refund.
The agency, which started accepting tax returns for the 2022 tax year on Jan. 23, said it has received almost 19 million filings through Feb. 3. In that time, the IRS has issued about eight million refunds, according to the most recent data.
The average refund check so far this year: $1,963, or almost 11% lower than compared to the same time a year earlier, when refunds were averaging about $2,200 per filer.
That jibes with warnings from tax pros and even the IRS itself that tax refunds this year would likely be smaller than in 2022, leading to what some experts are calling a "tax refund shock." The reason for the lower refunds stems from the expiration of pandemic tax credits and other benefits, ranging from the expanded Child Tax Credit to three rounds of federal stimulus checks.
More taxpayers are filing their returns earlier this year, according to IRS and U.S. Treasury Department data. Through Feb. 3, the IRS had received 19 million filings, about 2.3 million more than the same period a year ago.
One possible reason, Bank of America analysts said in a report: "We... believe individuals are filing their returns sooner this year to get refunds faster given the tougher economic environment."
The highest inflation in 40 years has walloped many Americans, with a recent Primerica study finding that three-quarters of families are cutting back on non-essential purchases to offset higher prices, while half are tapping into their emergency savings to keep afloat.
To be sure, it's still early in the tax filing season, with the IRS typically receiving more than 160 million tax returns annually. That means the vast majority of Americans have yet to file their taxes; the average refund is likely to change as the April 18 tax filing deadline draws near.
The average tax refund typically grows larger over the course of the tax filing season, likely as higher earners and people with more complicated taxes file later than those with simpler returns. The average tax refund in 2022 was almost $3,300, or 16% higher than in 2021.
Positive sign
Because of the jump in early filings, the IRS has issued more refunds so far compared with a year earlier, Bank of America noted. And more returns include refunds than last year, although the average amount is lower.
One positive note: The IRS appears to be in a better position to process returns quickly than in prior pandemic years, given its hiring of more than 5,000 new telephone customer service agents and more in-person staff to help people file their returns, Bank of America said. It added that the IRS has also whittled down its backlog of unprocessed returns.
Under the Inflation Reduction Act, the agency was allocated $80 billion over the next decade to beef up enforcement, hiring and its technology. That spending comes after millions of taxpayers suffered delays in processing their returns during the pandemic, with the IRS struggling to keep up due to staffing issues and a lack of modern equipment to scan and process paper returns.
The IRS says it sends 9 in 10 refunds within 21 days, although the agency has also warned taxpayers this year that they shouldn't bank on getting refund checks by any specific date this tax season.