The IRS has issued nearly 8 million tax refunds. Here’s the average payment

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Tax season is underway, and the IRS has issued nearly 8 million refunds worth about $15.7 billion as of Feb. 3, the agency reported.

The average refund amount was $1,963, down from last year’s average payment of $2,201 at the same point in the filing season. Of course, the average may change as the IRS processes millions more returns before the April 18 deadline.

While the agency warned refunds may be “somewhat lower” this season, experts say it’s still too early to know for sure.

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As of Feb. 3, the IRS had processed more than 16.7 million returns, 29% more than the previous year, according to the report released last Friday. The nearly 8 million refunds compare to around 4.3 million the previous year.

With almost 85% more refunds issued, the larger number of payments may be reducing the average refund size compared to last season’s payment, said Bill Smith, national director of tax technical services at CBIZ MHM’s national tax office.

Still, “it’s tough to draw too much of a conclusion over a relatively short period of time,” said Eric Bronnenkant, head of tax at Betterment, a digital investment advisor. 

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“I think the processing percentage is very telling,” said Smith, noting that the IRS might be more efficient without added pandemic duties and a smaller backlog of unprocessed returns.

The agency kicked off the tax season with a bigger customer service team and enhanced technology as it begins to deploy its nearly $80 billion in funding that Congress approved in August.  

“We have begun to see the light at the end of the tunnel,” National Taxpayer Advocate Erin Collins wrote in her January report to Congress. “I am just not sure how much further we have to travel before we see sunlight.”

How to get a faster tax refund

Smith said he’s curious to see how quickly refunds will reach electronic filers this season. “That’s the one statistic people really want to know,” he said.

Typically, you can expect refunds within 21 days when filing an error-free, electronic return with direct deposit for payment, according to the IRS.

You can avoid unnecessary delays by double-checking all the details on your return, including your address, Social Security number and direct deposit details, Bronnenkant said.  

You can check your refund status with the “Where’s My Refund?” online tool or through the IRS2Go app. But you’ll need to wait 24 hours after electronic filing your 2022 return, and three to four days after e-filing 2020 and 2021 returns. Paper returns may take up to four weeks for a status update. 

Source: CNBC