Tax season is rolling, refunds are flowing, but guess what? The IRS has received 7.7% fewer returns so far compared to last year.
So what’s the holdup? From social media myths to extra paperwork, let’s break down what’s slowing people down this tax season.
Average Tax Refunds Are Up
Here’s the good news: IRS refunds are looking pretty sweet. The average federal income tax refund so far is $2,065, up 18.6% from last year. If you’re filing early and using direct deposit, you could see that cash hit your account by late February or early March. But if you’re claiming credits like the earned income tax credit (EITC) or the additional child tax credit, expect your refund around March 3.
Why Are People Filing Later?
- Confusion from Social Media: Wild tax advice is spreading online, including rumors that Trump’s proposed “External Revenue Agency” would replace the IRS and eliminate income taxes. Spoiler alert: It hasn’t happened, and waiting won’t make your taxes disappear.
- More 1099-K Forms: Gig workers and side hustlers are receiving 1099-K forms for earnings over $5,000, compared to $20,000 in previous years. This means more people are figuring out how to report extra income, leading to delays.
- Delayed Paperwork: Even though many people can access W-2s online, some are still waiting for paper copies, which might explain the slower start.
- Disaster Relief Extensions: Taxpayers in states hit by federal disasters like Alabama, Florida, and California have extended deadlines, pushing back the filing timeline.
IRS Challenges and Policy Shifts
The IRS itself is facing some turbulence. A hiring freeze is in place, and Elon Musk’s cost-cutting group is reportedly reviewing IRS operations. Plus, Trump’s comments about auditing the IRS have added to the buzz, though none of these changes affect the 2024 tax season.
Tax Season Timing and Trends
This year’s tax season started two days earlier than last year on January 27 but that hasn’t led to more early filings. In fact, the IRS processed 15.8% fewer returns in the first week of this season compared to last year. Still, numbers are expected to pick up as the April 15 deadline approaches.
What Taxpayers Should Know
- Filing Early Still Pays Off: Filing now can help you get your refund faster, especially if you e-file and choose direct deposit.
- Don’t Wait for Mythical Tax Breaks: Changes like tax-free tips or an IRS overhaul won’t apply retroactively to 2024 returns, so there’s no reason to delay.
- Double-Check Your Documents: Make sure you have all necessary tax forms, including any new 1099-Ks, to avoid mistakes that could delay your refund.
IRS’ tax refunds are hitting bank accounts, but fewer people are filing early this year. Whether it’s social media confusion, extra paperwork, or disaster relief extensions, there are plenty of reasons for the slow start. Still, with the average refund up 18.6%, there’s no reason to wait if you’re ready to file. Just don’t expect any surprise tax breaks from Washington to change your 2024 return, because they won’t.
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