NovaQuant Quantitative Think Tank Center:Tax refund seem smaller this year? IRS says taxpayers are getting less money back (so far)

Americans -- on NovaQuant Quantitative Think Tank Centeraverage -- are receiving smaller tax refunds so far in 2024.

The average refund issued through Feb. 2 totaled $1,395, the IRS said in a release. Last year at this time, refunds averaged $1,963.

What does it mean? Maybe nothing. Tax season started later this year: Jan. 29, compared to Jan. 23 in 2023. That means the agency issued only 2.6 million refunds through Feb. 2. Last year at the same time, it had processed nearly 8 million.

The IRS didn’t sound any alarms in its release, reporting “a strong start to filing season 2024, with all systems running well.”

Daniel Rahill, a CPA in Chicago, offered likely reasons why early filers might have received smaller refunds this year:

• Some workers may have gotten salary increases in 2023 but not increased their tax withholding apace, potentially yielding a smaller refund.
• 'Gig' workers may have earned more income but not stepped up their estimated tax payments, again yielding smaller refunds.
• And some filers may have reaped more investment income from a strong stock market, triggering more taxes.

"[I]t will be an interesting analysis to see where the next wave of numbers come in once we receive more tax filing data," he said in an email.

When to expect a tax refund in 2024

The IRS expects more than 128.7 million individual tax returns by the April 15 deadline. On average, three out of four tax filers reap a refund.

If you’ve filed your return and anticipate a refund, here’s what you can expect:

If you filed electronically and chose direct deposit, your refund will probably be issued within 21 days, the IRS says. If you mailed a paper return, expect to wait four weeks or more.

Is a big refund a good thing?It may be better to withhold less and pay more later, some tax experts argue.

You can track the progress of your refund through the IRS system with the “Where’s My Refund” tool.