Decline in Early Tax Refunds
Early tax filers are receiving smaller refunds this year, with the average at $1,395 for the first few weeks, according to IRS data. This marks a 28.9% decline from last year's $1,963 average during the same period. The lower amounts stem from fewer filings, with about 15 million returns processed so far compared to nearly 19 million by early February 2023. Additionally, the tax season started later on January 29 versus January 23 last year, contributing to the disparity. Refunds are expected to even out as the season progresses.
I would expect things to be very much equal, barring any changes from Congress. If anything, changes to the child tax credit would increase refunds on average.
IRS Waives Penalties and Launches Direct File Pilot
The IRS is waiving $1 billion in penalty taxes to kick off the 2024 tax season on January 29. Separately, 12 states qualify for the IRS Direct File pilot program, which offers a free filing system to simplify the process and eliminate reliance on third-party software like TurboTax. Aimed primarily at low-income filers unable to afford paid preparation, the program is rolling out in stages to address any issues before nationwide expansion.
States Qualifying for IRS Direct File Pilot
- Arizona
- California
- Florida
- Massachusetts
- Nevada
- New Hampshire
- New York
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
I really hate to see low-income people giving money to paid preparers. I get angry about it. [The program is] one more option for free tax preparation, and hopefully people will take advantage of it.
Tax Filing Extensions for Natural Disaster Areas
Taxpayers in states affected by natural disasters qualify for filing extensions, with most needing to pay by April 15 but allowed until June 17 to file in designated areas. Connecticut residents impacted by January flooding have until June 17. Maine counties including Androscoggin, Franklin, Hancock, Kennebec, Oxford, Penobscot, Piscataquis, Somerset, Waldo, and Washington also extend to June 17 due to late-year flooding. Rhode Island's Providence County qualifies from severe storms. Tennessee's Davidson, Dickson, Montgomery, and Sumner counties extend deadlines after December tornadoes. West Virginia's Boone, Calhoun, Clay, Harrison, and Kanawha counties receive relief from summer flooding, landslides, and mudslides.
