With the tax season in full flow after the initial delay, most taxpayers can expect a tax refund in their bank accounts or their mailbox in the coming weeks if they have filed their income tax returns for 2022. The season began on January 23 this year but taxpayers in close to two dozen states were advised by the IRS to delay filing their returns. The IRS was itself in a quandary over the treatment of the inflation relief stimulus checks and tax rebates given out by these states.
It wasn’t until the second week of February that the premier tax agency finally stated that the inflation relief payments sent out by most of the states would not be considered as income in their returns. it effectively meant that most beneficiaries of the inflation relief payments were exempted from paying any federal income tax on these payments, most of which were paid in 2022 and have continued into the first quarter of 2023.
Many taxpayers are yet to receive their tax refunds despite filing their income tax returns quite early this year. the IRS has sent out a record number of tax refunds this year and the rate has been the highest ever. But the average tax refund check has been lower than in the pandemic years as most federal aid has been discontinued for 2022 including the generous Child Tax Credit stimulus check which was given out for only one year, 2021.
50% of these CTC payments went out as tax refunds in the 2022 tax year as a tax refund or rebate which inflated the average tax rebate and also the total amount that went out as rebates in 2022.
Reasons Behind A Missing Tax Refund In 2023
For those who are expecting a tax refund, and it has not arrived even 6 weeks into the tax season, there are other reasons that it could be delayed or has not been delivered to you for several reasons. And if you need your refund immediately owing to financial hardship, there are steps you need to take to rush the process.
The IRS normally releases refunds within a specified time. Generally, the agency requires a couple of weeks at the most to process a tax refund on an electronically filed income tax return. For a paper income tax return, the time required increases exponentially as there are postal service delays to contend with.
The PATH Act made several changes that became effective for the 2017 income tax filing season. It was to help prevent revenue loss caused by identity theft and refund fraud related to fabricated withholdings and wages.
Under the changes, the IRS may not issue any tax refund or credit to you before February 15th, if you claim the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC) on the tax returns. this change only affects returns claiming EITC or ACTC that are filed before February 15th each year.
The IRS will also hold your entire tax refund, including your refunds that are not linked to the ACTC or the EITC.
Expediting Your Tax Refund
If you as a taxpayer is facing a hardship, such as a financial hardship that prevents you from buying medicine, paying rent or mortgage, or have received an eviction notice, the IRS can expedite the tax refund if you apply for your refund sooner. You would need to contact the agency and give details of your situation.
But the IRS can only help in expediting the process if it is held up due to a temporary processing backlog. You will receive a notice letter from the agency informing you of a problem with your tax return or if any other issues are delaying your tax refund.
In such cases, if you experience financial hardship, the IRS normally processes your tax refund manually so that you get it earlier than through the normal process. At your end, it is pertinent that you submit your paper on time and ensure that it is in order, including your bank account, address, and other details.
Owing Tax From An Earlier Year
For those taxpayers who owe tax to the agency from an earlier year, the IRS may hold down your tax refund to pay down your debt. But if you are in serious financial problems and need the refund amount immediately, the IRS has the power to consider your case. They may not follow the usual procedure of curtailing your tax refund. It may instead decide to release part or even the full refund to help you tide over your financial crisis.
But the IRS’s power is limited to expediting a refund if it is held to pay a debt due to the agency. If the Bureau of Fiscal Service (BFS) offsets your tax refund for debts that are other than federal income tax debts such as student loans, state unemployment compensation, child support, or various federally insured debts, the IRS is powerless to issue a tax refund even if you are facing a situation of the serious financial crisis.
Tax Refund Checks Differ With States
While millions of taxpayers are in line for a tax refund, the amount varies across states with filers in some states receiving significantly higher refunds after they file their returns. The 2018 data reveal that the average across-the-board tax refund was around $3,660. But filers in around 13 American states received higher tax refunds than the national average. And for residents of 37 states, the check amount was smaller than the national average.
The reasons are numerous, and it isn’t easy to pin them down to anyone. Many individual variables go towards calculating the tax refund amount that the agency sends to the taxpayers.
Factors that influence the size of the refund check include income, family size, living arrangement, the field of work, and various factors. Generally, filers in states with low living costs see the highest average refunds, including Florida and Wyoming. These state residents are the biggest beneficiaries of tax season.
