Points to keep in mind:
In a recent announcement, the Internal Revenue Service provided details on tax refunds that will be paid out in 2022.
So far, the average payout has been $656 more than the refund expected for 2021, which is a significant increase.
It’s possible that the extra funds are attributable to the large number of Americans who have gotten stimulus funds.
Thanks to the Stimulus Package, Americans were able to get an additional $650.
In 2021, the American Rescue Plan Act provided major financial aid to Americans who had been harmed by the COVID-19 outbreak.
The stimulus payments were made in the form of advances on tax credits in order to ensure that households received the funds when they were most in need of it. Throughout the year, the Internal Revenue Service was in charge of depositing money into people’s bank accounts.
The good news is that people who did not receive all of the money due will still be able to claim tax credits when they file their taxes in 2021.
The filing season for the year 2021 has already begun, and many citizens of the United States have already begun to submit their paperwork. Following the completion of more than 35 million tax returns, the Internal Revenue Service has published certain statistics to provide a snapshot of its actions through February 18, 2022.
It appears that the average refund provided so far in 2022 is much higher than the average refund issued in 2021, based on this information.
While there are a lot of possible explanations for this, the fact that millions of people are claiming unpaid stimulus funds may explain why they are receiving more than $650 back from the IRS this year compared to the prior year, which is a significant increase.
Is it possible that increased tax refunds are a result of stimulus spending?
According to IRS data, the average refund issued so far in 2022 has been $3,536 dollars. This marks an increase from the previous year’s $2,880. In other words, the average American taxpayer who has submitted a tax return thus far has gotten an additional $656 in a tax refund.
Given that this is an average, some persons may have received smaller or unaltered refunds, and others may have received thousands of dollars in more compensation.
There is also a possibility that the American Rescue Plan Act will result in a high number of taxpayers obtaining substantial refunds, increasing the IRS’s overall average amount of refunds issued.
According to the COVID-19 relief program, for example, qualifying people and their dependents were given $1,400 in stimulus checks as compensation.
This bill also increases the current Child Tax Credit for children under the age of six from $2,000 to $3,600 for those under the age of six and for children aged six and up from $3,000 to $4,000 for those aged six and up.
While just a portion of the previous Child Tax Credit was refundable, the enhanced credit is fully refundable, which means that some people will get significantly more money in refunds than they paid in taxes in the first place.
Individuals who did not have their data on file with the IRS because they had not sent in recent returns or who added a dependent during the previous year may not have received any of this money, despite the fact that the IRS distributed the entire amount of stimulus checks and half of the expanded Child Tax Credit in 2021.
The fact that these individuals have been eager to submit their returns in order to receive their refunds could be one of the factors contributing to the higher average refund this year.
The situation may alter in the future, however, because it is possible that those who are expecting a refund submitted their forms earlier than those who are owing money. This would suggest that the considerable increase in the average number of refunds sent during the 2022 filing season may not be sustainable.
For the time being, though, IRS data suggests that many more Americans are receiving money from the agency this year than they did a year ago, according to the agency.