Though the confirmation on the new stimulus checks is still not there, many taxpayers can expect a higher tax refund this year. As confirmed by the IRS, the average refund that has been issued this year is higher than what was completed in the previous year.
Main reason for higher returns
It’s thought that a link between stimulus checks and tax returns is causing people to receive larger refunds. This year’s tax filing season begins on January 24 and ends on April 18.
Stimulus check and tax return relationship
Last year, the American Rescue Plan Act provided eligible recipients with $1,400 in stimulus funds. The $1,400 stimulus check was an advance tax credit, the same as the last stimulus cheques.
Those who did not receive stimulus funds last year might claim them this year by filing a tax return. The IRS recently disclosed data on tax returns, revealing that it had processed over 33 million returns.
The average return amount issued thus far is ,536, compared to ,880 in 2021.
It means that people will get $656 more in their tax refund this year on average, as confirmed by ValueWalk.
Any other reasons for a higher refund
The American Rescue Plan Act increased the child tax credit (CTC) from $2,000 to $3,600 for children under six and up to $3,000 for older children. The initial child tax credit was only partially refundable; now, the entire amount is refundable with the increased CTC. Another reason why taxpayers are getting (or may get) larger refunds this year is because of this.
Furthermore, families or individuals who added a dependent last year may not have claimed the appropriate stimulus payment the previous year. They are qualified to get the funds this year, which is another potential reason why the average return amount has been significantly higher this year.
Nevertheless, this year, various US citizens are in line for a higher tax refund, which will be beneficial for them.