- If you're expecting a tax refund in 2023, it may be smaller than this year's payment, according to the IRS.
- Typically, you get a federal refund when you've overpaid yearly taxes or withheld more than the amount you owe.
- You may receive a lower refund because there was no stimulus payment in 2022, and there's a less generous tax deduction for charitable gifts, the IRS said.
If you're expecting a tax refund in 2023, it may be smaller than this year's payment, according to the IRS.
Typically, you get a federal refund when you've overpaid yearly taxes or withheld more than the amount you owe.
Your annual balance is based on taxable income, calculated by subtracting the greater of the standard or itemized deductions from adjusted gross income.
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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."
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The average refund for the 2022 filing season was $3,176 as of Oct. 28, according to the IRS, up nearly 14% from $2,791 in 2021.
Charitable deduction for 2022 is 'not as robust' as 2021
Additionally, it will be more difficult to claim a deduction for charitable gifts on your 2022 return, the IRS said.
The reason: "Deductions for charitable donations in 2022 are not as robust as 2021," said certified financial planner Marguerita Cheng, CEO of Blue Ocean Global Wealth in Gaithersburg, Maryland.
In response to the Covid-19 pandemic, Congress gave charities a boost in 2020 by offering a tax incentive for cash gifts, and lawmakers extended the tax break for 2021.
With a higher standard deduction since 2018, it's become more difficult to itemize deductions, including the tax break for charitable gifts. Filers choose either the standard deduction or itemized deductions, whichever is greater.
But for 2021, you could claim up to $300 for cash donations or $600 for married couples filing together, regardless of whether you itemize.
The tax break was not extended for 2022, however, meaning there's no longer a benefit for charitable gifts if you take the standard deduction, the IRS said.
When to expect your tax refund
The IRS has warned taxpayers not to count on receiving a 2022 tax refund "by a certain date," as some filings may require "additional review," which may delay the process.
Generally, you can expect a faster refund by electronically filing an error-free return and receiving payment via direct deposit. However, mistakes and other issues, such as identity theft, may hold up your refund, the agency said.
Filers claiming the earned income tax credit or the child tax credit won't receive refunds before mid-February, the IRS said.
As of Nov. 18, there were 3.4 million unprocessed individual returns received in 2022, including filings for previous tax years, the IRS reported. These pending returns are 1.7 million requiring error correction or other special handling, and 1.7 million paper filings.
The agency has hired more workers to prepare for the upcoming tax season, with plans to add more, aiming to clear the backlog and improve customer service. With nearly $80 billion in IRS funding over the next decade, these efforts are part of a broader plan for agency improvements.
FAQs
“Refunds may be smaller in 2023,” the IRS said in a November news release. “Taxpayers will not receive an additional stimulus payment with a 2023 tax refund because there were no economic impact payments for 2022.”
Is everyone getting a smaller tax refund in 2023? ›
Nearly three-quarters of filers received a tax refund in 2023, with an average payment worth about $3,176, down about 3% from the previous year. Some tax experts say refunds could end up being much bigger in 2024, with some people receiving up to 10% more than they did last year.
Why the IRS says to expect smaller tax refunds this year? ›
Changes to your income last year may play a role in receiving a smaller refund this tax season. Here are some examples: Salary increase: If you got a salary increase last year but neglected to increase your tax withholding, this could lead to a smaller tax refund when you file.
Why are 2023 tax returns so slow? ›
Issues that can cause your refund to be delayed according to the IRS include: If the taxpayer is claiming certain credits, like the EITC or the Additional Child Tax Credit (ACTC). Whether the return is e-filed or sent by mail. If the taxpayer has existing debts to the federal government.
Why is the IRS reducing refunds? ›
If you owe money to a federal or state agency, the federal government may use part or all of your federal tax refund to repay the debt. This is called a tax refund offset. If your tax refund is lower than you calculated, it may be due to a tax refund offset for an unpaid debt such as child support.
What is the average tax return for a single person making $60,000? ›
If you make $60,000 a year living in the region of California, USA, you will be taxed $13,653. That means that your net pay will be $46,347 per year, or $3,862 per month.
What is the average tax return for a single person making $40,000? ›
If you make $40,000 a year living in the region of California, USA, you will be taxed $7,507. That means that your net pay will be $32,493 per year, or $2,708 per month.
Why am I getting so little back in taxes? ›
There are many events that may reduce your refund, including: Starting an additional job (especially self-employment) Getting a significant raise, but your W-4 staying the same. Selling stock, crypto, or other investments.
Why am I getting so little back in taxes in 2024? ›
You may be in line for a smaller tax refund this year if your income rose in 2023. Earning a lot of interest in a bank account could also lead to a smaller refund. A smaller refund isn't necessarily terrible, since it means you got paid sooner rather than loaning the IRS money for no good reason.
What is the average tax refund for a single person? ›
Average federal refund: According to the IRS the average refund was $3,140 as of 2/17/2023.
If your refund details state that it's still processing, you can check your tax return to see if you catch any errors. If your refund status instructs you to contact the IRS, you can speak to an agent to get clarification by calling 1-800-829-1040.
How long can the IRS hold your refund for review in 2023? ›
See our Held or Stopped Refund page or our video for more information. If the IRS is reviewing your return, the review process could take anywhere from 45 to 180 days, depending on the number and types of issues the IRS is reviewing.
How do I know if my tax return has been flagged? ›
If the IRS decides that your return merits a second glance, you'll be issued a CP05 Notice. This notice lets you know that your return is being reviewed to verify any or all of the following: Your income. Your tax withholding.
How to get $10 000 tax refund? ›
CAEITC
- Be 18 or older or have a qualifying child.
- Have earned income of at least $1.00 and not more than $30,000.
- Have a valid Social Security Number or Individual Taxpayer Identification Number (ITIN) for yourself, your spouse, and any qualifying children.
- Living in California for more than half of the tax year.
All or part of your refund may be offset to pay off past-due federal tax, state income tax, state unemployment compensation debts, child support, spousal support, or other federal nontax debts, such as student loans.
How to get a bigger tax refund? ›
Here are four simple ways to get a bigger tax refund according to the experts we spoke to.
- Contribute more to your retirement and health savings accounts.
- Choose the right deduction and filing strategy.
- Donate to charity.
- Be organized and thorough.
If your income hasn't changed much since last year, you might still be in a lower tax bracket for 2023 because of the inflation adjustments.
Why did I get so much less tax refund this year? ›
There are many events that may reduce your refund, including: Starting an additional job (especially self-employment) Getting a significant raise, but your W-4 staying the same. Selling stock, crypto, or other investments.
What is the average tax refund in 2023? ›
Which income bracket got the biggest refund?
| Income level | Average refund | % of income |
|---|
| $25,000 to $49,999 | $2,845.81 | 5.7% to 11.4% |
| $50,000 to $74,999 | $2,830.10 | 3.8% to 5.7% |
| $75,000 to $99,999 | $3,347.69 | 3.3% to 4.5% |
| $100,000 to $199,999 | $4,436.36 | 2.2% to 4.4% |
3 more rowsApr 14, 2024
