This year’s tax refunds may be bigger because of stimulus payments, even though there will be no new stimulus checks. According to the most recent IRS data, this year’s average refund is higher than the previous year’s. People are getting more money back in tax refunds since stimulus cheques and tax returns appear to be linked. As of this year, the tax-filing deadline is April 18, with the beginning of the season on January 24.
What’s the Connection Between Stimulus Checks And Tax Returns?
The American Recovery and Reinvestment Act of 2013 provided qualified beneficiaries with stimulus cheques of up to $1,400. The $1,400 stimulus check was also an advance tax credit, much like the previous stimulus checks.
Those who missed out on stimulus funds last year can now claim them on their tax returns for this year. People claiming unpaid stimulus monies, according to many, is a potential cause of this year’s higher average refunds.
More than 33 million returns have been handled by the IRS since February 18, 2022, according to recently disclosed statistics. The average refund granted so far is $3,536, which is higher than the average refund of $2,880 in 2021 (see chart below). On average, taxpayers will receive $656 more in their tax refunds this year than they did in 2013.
Some people would have received lesser refunds; others would have received no change, yet others would have obtained larger refunds than the average amount of $656.
Other Reasons for a Greater Amount of Refunds
American Rescue Plan Act also included an increase in the child tax credit (CTC) from $2,000 to $3,600 for children under the age of six and up to $3,000 for children ages seven and older. Previously, just a portion of the initial child tax credit was refundable; however, now the entire benefit is. This is just another reason why this year’s tax refunds are expected to be greater than usual.
More to Read:
- Stimulus Update: Are You Sick of Hearing About the Child Tax Credit? Five Things We’re Quite Certain About.
- You May Apply Now for Monthly $1,000 Stimulus Payments, Which Will Begin in March.
- Stimulus Update: The Internal Revenue Service Announces Resources to Assist Taxpayers Who May Be Owed Unpaid Stimulus Funds
For this reason, it’s possible that families or people who had a dependent last year did not claim the corresponding stimulus payments this year (stimulus check, dependent payment, and child tax credit). It is possible that this year’s higher average refunds are due to the fact that they are able to collect the money this year.
Depending on the volume of returns processed by the agency, this average refund amount might increase or decrease. We won’t know for sure until the IRS releases further information.
This year’s first few weeks of filing season may have a big impact on weekly figures because of a variety of factors, including the calendar and filing habits that can fluctuate year-to-year, according to the CRA.
There is a relationship between stimulus cheques and tax returns, and this is the most plausible explanation for increased refunds.