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Key Points
- Dramatic Drop in Returns Filed: The IRS saw a sharp 19.1% fall in the total returns received, dropping from 18,946,000 in the previous year to 15,318,000 so far in 2024.
- Impact on Refunds: Alongside the decline in filings, there was a substantial 67.3% decrease in the number of refunds issued and a 76.8% fall in the total amount refunded, signaling a significant shift in taxpayer returns.
- E-Filing Trends: E-filings from tax professionals and self-prepared filings saw reductions of 19.7% and 12.3% respectively.
Key statistics released by the IRS for the week ending February 2, 2024, reveal notable shifts in tax return filings, processing, and refunds. The 2024 tax season opened on January 29, about a week later than last year, and as a result, less taxpayers have been able to file their tax return.
The reduction in filings is shedding light on potential shifts in taxpayer behavior, economic factors, or the implications of tax policy changes. The IRS’s readiness to handle the season effectively, despite fewer returns, indicates a well-prepared system, yet the lower volume of filings and lower tax refund amounts raise questions about the broader tax filing landscape.
Related: When To Expect My Tax Refund In 2024
Decrease In Tax Returns Filed
Even though tax season officially started on January 29, 2024, many early filers typically start preparing their returns in early January. So even with the late start, the almost 20% decline is troubling.
In 2023, by February 3, Americans had filed 18,946,000 tax returns. This year, by February 2, Americans had only filed 15,318,000 returns. That 19.1% decrease is likely a combination of the late start to tax season, and concerns about potential changes.
This is highlighted in the returns filed by tax preparers. Many tax preparers have noted they are waiting on Congress to resolve the outstanding issues around the potential retroactive tax changes (including the Child Tax Credit). As a result, many professional tax preparers are waiting to file their clients’ returns.
Lower Refunds For Taxpayers
The substantial decline in the total amount refunded and the average refund amount is a critical point of interest. This shift could impact individual financial planning and spending, reflecting broader economic conditions and tax policy changes.
So far in 2024, the average tax refund amount is down to $1,395, versus $1,963 this time last year. That’s a 28.9% decline. We expected tax refunds to be smaller this year due to many tax credits expiring, but this is significantly more than expected. Furthermore, the total number of refunds is down 67.3% overall.
This reduction could have wider implications for individual financial planning and economic activity, as refunds often contribute to consumer spending.
Looking Ahead
As the 2024 tax season unfolds, this early data from the IRS serves as a crucial indicator of the season’s trajectory and the evolving tax filing environment.
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Editor: Ashley Barnett
The post IRS Reports 19% Drop in Early Tax Filings for 2024 Season appeared first on The College Investor.
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