Taxpayers Getting $650 More Due To Stimulus Checks And Tax Returns
Fresh stimulus checks aren't coming, but it is possible that stimulus payments are resulting in people getting higher refunds this year. As per the latest data from the IRS, the...
Fresh stimulus checks aren't coming, but it is possible that stimulus payments are resulting in people getting higher refunds this year. As per the latest data from the IRS, the average refund issued so far this year is more than that of last year. It is believed that a connection between stimulus checks and tax returns is resulting in people getting higher refunds. This year, the tax filing season started on January 24 and the last date to file the return is April 18.
Stimulus Checks And Tax Returns: What's The Connection?
Last year, the American Rescue Plan Act offered stimulus checks of up to $1,400 to eligible recipients. Similar to the earlier stimulus checks, the $1,400 stimulus check was also an advance tax credit.
Those who didn't get the stimulus money last year were allowed to claim it this year by filing their tax return. Many believe this, i.e. people claiming unpaid stimulus funds, is a likely reason of higher average refund amounts this year.
Recently, the IRS released the tax return data (of its activities through Feb. 18, 2022), showing that it has processed more than 33 million returns. The average refund amount issued so far is $3,536, compared to an average refund amount of $2,880 in 2021. It implies that, on average, people are getting $656 more in their tax return this year.
A point to note is that $656 is an average amount, meaning many taxpayers would have gotten a smaller refund, for many there would have been no change and some would have gotten a higher than average refund.
Other Likely Reasons For Higher Refunds
Along with the stimulus check, the American Rescue Plan Act expanded the child tax credit (CTC) from $2,000 to $3,600 for kids below 6 years old and up to $3,000 for older children. Only a part of the original child tax credit was refundable, but with the expanded CTC, the full amount is refundable. This is another reason why taxpayers are getting (or may get) higher refunds this year.
Additionally, families or individuals who added a dependent last year may have also not claimed the applicable stimulus payment (stimulus check, dependent payment and child tax credit) last year. They are eligible to claim the money this year, and this is another likely reason why the average refund amount is much larger this year so far.
It is likely that this average refund amount could get bigger, or even smaller as the agency processes more returns. To know this, we will have to wait for the IRS to share more data.
"For historical perspective, it's important to remember these weekly numbers can shift dramatically during the initial weeks of filing season due to numerous factors, including the calendar and filing patterns that can change year to year," the agency says.
For now at least, we know that taxpayers are getting higher refunds, and a likely reason for this is a connection between stimulus checks and tax returns.
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