Tax refund amounts down, as IRS touts successful season kickoff
Filing season has just begun, but early readings show Americans are already receiving less money back from the Internal Revenue Service when compared with last year.
According to data released by the Internal Revenue Service (IRS), the average refund so far during the 2018 filing season is $1,865, compared to $2,035 last year – a decline of 8.4 percent.
As previously reported by FOX Business, many taxpayers could be in for a shock when they get their refunds this year. That’s because more people were at risk of having tax payments underwithheld due to the new tax law, since employers were using W-4 forms already on file to calculate withholding amounts. That is problematic because the sweeping tax overhaul changed everything from personal exemptions to the standard deduction.
This year, the average person expects to receive about $3,000, according to a recent survey from GOBankingRates.
Between Jan. 28 and Feb. 1, 17 million refunds were processed, according to the agency, a decline of more than 25 percent when compared with the corresponding period last year (Jan. 29 to Feb. 2, 2018). More than 12 percent fewer returns have been received year-over-year.
Meanwhile, the IRS and the U.S. Treasury Department on Friday touted a “successful” start to the 2018 tax season, despite concerns this year’s filing process could be complicated by a record-long partial government shutdown.
“Filing season has successfully launched with millions of tax returns having been filed,” Treasury Secretary Steven Mnuchin said in a statement. “We thank the Treasury and IRS employees who have been working diligently to ensure the system is processing these returns efficiently.”
Tax season officially opened on Jan. 28, amid concerns that the 35-day government shutdown would increase challenges during the first season taxpayers were filing under the Tax Cuts and Jobs Act.
In an effort to make sure the refund process went smoothly, the agency called back about 60 percent of its furloughed workforce before a deal was struck to temporarily fund the government in full. However, even as the government resumes normal operations, the Center for Freedom and Prosperity’s Dan Mitchell told FOX Business it could take it take a year or more for the agency to return to business as usual.
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Many U.S. households rely on their annual tax refunds. More than 70 percent of Americans receive money back from the IRS during tax season, and the majority plan to spend this year’s refund on debt, according to a new study.
Congress faces a deadline next week to reach a permanent funding deal for the current fiscal year, or it faces the risk of another shutdown.
Correction: An earlier version of this article incorrectly stated the average refund last year as $2,354. It was $2,035.