IRS update: Some taxpayers set to receive smaller refunds–Here’s why!
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As the tax season unfolds, many Americans eagerly anticipate the arrival of their tax refunds, a financial boost that often goes towards everything from paying down debt to splurging on a well-deserved treat.
However, this year, the buzz around tax refunds has taken a somber turn. The Internal Revenue Service (IRS) has confirmed that some taxpayers may see a significant reduction in their refunds.
If you're wondering whether your bank account will feel the pinch, find out the real reasons behind this change and what it could mean for you.
Early IRS data suggests that many taxpayers may see significantly smaller refunds—on average, about a third less than last year’s amounts.
As of mid-February, over 33 million tax returns have been filed, which is 5% fewer than at this point last year. The average refund check as of February 14, 2025, is $2,169—32% lower than last year’s average of $3,207 for the same period.
The IRS warns against jumping to conclusions just yet, as refund amounts fluctuate throughout the season. They recommend waiting until April 15th, the official tax deadline, for a more complete picture.
The question on everyone's mind is: Who will receive $1,000 less in their IRS tax refund? While it's challenging to pinpoint every individual affected, certain factors may contribute to this decrease.
The IRS has indicated that small business owners and gig workers could be among those facing reduced refunds.
One major factor is the delay in filing due to required tax forms. Some small business owners may have waited longer than usual to receive their financial tax documents, particularly the W-12 form, which must be issued by January 31st. This could explain why fewer returns have been submitted so far.
Similarly, gig workers are facing new 1099-K form requirements. Previously, these tax forms were only required for gig workers earning over $20,000 with 20+ transactions per year.
However, this year, 1099-Ks are being issued to a much broader range of workers, causing some to hold off on filing while they figure out their tax obligations.
Speculation abounds that some taxpayers delayed filing in anticipation of tax benefits promised by President Trump during his campaign, including the elimination of tip taxes. However, these proposed changes are unlikely to impact this tax year's filings.
Adding to the uncertainty, Elon Musk's Department of Government Efficiency (DOGE) has been reviewing IRS operations.
A post Musk made on social media in February sparked fears that Direct File, a free online tax preparation and filing tool, had been removed. Although Direct File is still available in 25 states, the confusion may have contributed to taxpayers postponing their filings.
Although there’s a potential for smaller refunds, the IRS and tax professionals emphasize the benefits of filing early.
With IRS office closures and potential staff reductions, filing electronically can expedite the refund process, typically within 21 days. In contrast, paper filings require manual processing by an IRS agent, leading to longer wait times.
As of February 14, 2025, the average refund check was approximately $2,169, a stark 32% drop from the previous year's average of $3,207.
This has understandably raised concerns among individual taxpayers who fear a $1,000 reduction in their refunds.
However, tax professionals caution that not everyone should expect a smaller check, as refund amounts will vary as more people file.
Recommended for you: Get your tax refund faster: 3 simple steps to track it right now!
It's important to remember that early filers often include those with low to moderate incomes, who typically have simpler tax situations.
Those with more complex taxes, including wealthier households, tend to file later in the season.
As such, the current statistics are likely to evolve as the April 15th deadline approaches and more returns are processed.
Also read: Filing frustrations? Here’s 4 reasons why your tax refund might be delayed–and what you can do about it!
If you're concerned about the size of your tax refund, consider the following steps:
1. File early: Submit your tax return as soon as possible to avoid delays and receive your refund promptly.
2. Review your withholdings: Check your W-4 form and adjust your withholdings if necessary to prevent surprises next tax season.
3. Seek professional advice: If you're unsure about your tax situation, consult with a tax professional who can provide personalized guidance.
Have you filed your taxes yet, and if so, have you noticed a change in your refund amount? Do you have tips for navigating tax season or questions about the IRS's latest updates? Share your experiences and join the discussion below!
However, this year, the buzz around tax refunds has taken a somber turn. The Internal Revenue Service (IRS) has confirmed that some taxpayers may see a significant reduction in their refunds.
If you're wondering whether your bank account will feel the pinch, find out the real reasons behind this change and what it could mean for you.
Early IRS data suggests that many taxpayers may see significantly smaller refunds—on average, about a third less than last year’s amounts.
As of mid-February, over 33 million tax returns have been filed, which is 5% fewer than at this point last year. The average refund check as of February 14, 2025, is $2,169—32% lower than last year’s average of $3,207 for the same period.
The IRS warns against jumping to conclusions just yet, as refund amounts fluctuate throughout the season. They recommend waiting until April 15th, the official tax deadline, for a more complete picture.
The question on everyone's mind is: Who will receive $1,000 less in their IRS tax refund? While it's challenging to pinpoint every individual affected, certain factors may contribute to this decrease.
Average tax returns for Americans may be about a third lower than last year, according to early data from the IRS. Image source: Recha Oktaviani / Unsplash.
The IRS has indicated that small business owners and gig workers could be among those facing reduced refunds.
One major factor is the delay in filing due to required tax forms. Some small business owners may have waited longer than usual to receive their financial tax documents, particularly the W-12 form, which must be issued by January 31st. This could explain why fewer returns have been submitted so far.
Similarly, gig workers are facing new 1099-K form requirements. Previously, these tax forms were only required for gig workers earning over $20,000 with 20+ transactions per year.
However, this year, 1099-Ks are being issued to a much broader range of workers, causing some to hold off on filing while they figure out their tax obligations.
Speculation abounds that some taxpayers delayed filing in anticipation of tax benefits promised by President Trump during his campaign, including the elimination of tip taxes. However, these proposed changes are unlikely to impact this tax year's filings.
Adding to the uncertainty, Elon Musk's Department of Government Efficiency (DOGE) has been reviewing IRS operations.
A post Musk made on social media in February sparked fears that Direct File, a free online tax preparation and filing tool, had been removed. Although Direct File is still available in 25 states, the confusion may have contributed to taxpayers postponing their filings.
Although there’s a potential for smaller refunds, the IRS and tax professionals emphasize the benefits of filing early.
With IRS office closures and potential staff reductions, filing electronically can expedite the refund process, typically within 21 days. In contrast, paper filings require manual processing by an IRS agent, leading to longer wait times.
As of February 14, 2025, the average refund check was approximately $2,169, a stark 32% drop from the previous year's average of $3,207.
This has understandably raised concerns among individual taxpayers who fear a $1,000 reduction in their refunds.
However, tax professionals caution that not everyone should expect a smaller check, as refund amounts will vary as more people file.
Recommended for you: Get your tax refund faster: 3 simple steps to track it right now!
It's important to remember that early filers often include those with low to moderate incomes, who typically have simpler tax situations.
Those with more complex taxes, including wealthier households, tend to file later in the season.
As such, the current statistics are likely to evolve as the April 15th deadline approaches and more returns are processed.
Also read: Filing frustrations? Here’s 4 reasons why your tax refund might be delayed–and what you can do about it!
If you're concerned about the size of your tax refund, consider the following steps:
1. File early: Submit your tax return as soon as possible to avoid delays and receive your refund promptly.
2. Review your withholdings: Check your W-4 form and adjust your withholdings if necessary to prevent surprises next tax season.
3. Seek professional advice: If you're unsure about your tax situation, consult with a tax professional who can provide personalized guidance.
Have you filed your taxes yet, and if so, have you noticed a change in your refund amount? Do you have tips for navigating tax season or questions about the IRS's latest updates? Share your experiences and join the discussion below!
