CINCINNNATI — If you are receiving a smaller tax refund this year, you are not alone.
The IRS just announced that the average refund this year is $360 less than one year ago, which is not good news at a time of high inflation.
As the agency processes millions of returns this month, it said the average tax refund so far is $2,903 this year. That's 10 percent less than one year ago, when the average refund was over $3,300.
Jessica McDaniel said she noticed hers is down this year.
"The limits for what you can get on child tax credit have been lowered, so it's half normal for me," she said.
Karen Short said she is in an even worse predicament.
"I'm not getting one," she said. "I am a single parent, I'm single and my kids are all grown."
Why so many refunds are smaller?
There are all sorts of personal reasons for why your refund may be smaller this year, but for the majority it all comes down to the end of all those pandemic benefits that boosted refunds the past couple of years.
IRS spokesperson Luis Garcia said refunds are now mostly based on income and withholding, not expanded pandemic benefits.
"People are going to see a little bit less in their refunds, because there was no more stimulus, no more augmented earned income tax credit, or child credit," Garcia said.
The other reason for smaller refunds? Most taxpayers can no longer deduct charitable contributions such as clothing donations to Goodwill, or a cash gift to your church or college.
Unless you itemize your deductions — and most people no longer qualify to itemize — you can't boost your refund by donating to charity.
So for millions of Americans like Jessica McDaniel that refund will be "definitely worse."
The worst part of these smaller refund checks is that families need them more than ever as inflation hits their finances hard — and they have no stimulus checks to fall back on.
Want a bigger refund next year? Though most financial advisers don't recommend it, you can ask your employer to withhold more money from your paycheck.
That way your refund will be larger and you don't waste your money.
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