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Americans may get a little more money on their tax returns this year.
Financial experts said some households across the country may be getting extra benefits thanks to the inflation rate.
“People whose income doesn’t outpace inflation should do better,” Mark Steber, chief tax information officer at Jackson Hewitt, explained in an interview with Fox Business.
“It’s not even voodoo or marketing twists, it’s pretty much just science.”
Refunds typically occur when a taxpayer overpaid or had too much tax withheld during the previous year.
Last year, the average refund for a U.S. family remained relatively high at $3,176, but it is down about 3% from 2022.
Stever predicts the average will rise by about 10% in 2024, resulting in an increase of about $300 to $400 for many filers.
It turns out that rampant inflation starting in 2023 may have decisively helped US residents this tax season.
So how does this work?
The IRS adjusts federal tax income brackets and standard deductions annually, with brackets increasing as inflation increases.
These increases were significant for this tax season, at about 7.1%.
That means the average American’s income grew by 5.5% in 2023, according to Fox Business.
The bracket increase is intended to reduce a phenomenon known as “bracket creep” due to inflation.
Taxpayer protection
This occurs when certain taxpayers are pushed into higher income brackets but still have the same “purchasing power” even though the prices of goods and services have increased .
Steber said protection against bracket creep is important.
“For taxpayers who have earned more money in the past and not outpaced inflation, without this adjustment they would have even less money in their pocket, but without an inflation adjustment like the one the IRS would make, “You’re paying a lot of tax,” he said.
Steber added that a 10% increase is expected, given that “there hasn’t been a lot of good news” with rising inflation last year, and low-to-moderate income households could particularly benefit. Ta.
“There’s not a lot of good news for low- and middle-income people who haven’t been able to keep up with inflation, but that’s a lot of people,” he told Fox Business.
“This is not an outlier group. These people should be in a slightly better tax situation this year.”
The IRS estimates there will be approximately 128.7 million filings this year.
The filing deadline for most taxpayers is April 15, 2024.
It is also important for those who want a refund within 21 days to file their taxes electronically.
Taxpayers should seek professional help if necessary to ensure that their returns are accurate and complete.
Still, the IRS warned that some returns may be in error, suspected of theft or fraud, and may require “additional review.”
For more related content, check out The US Sun’s article about a taxpayer who tried every filing system and found the most seamless system with no fees.
The US Sun also has an article about why a former IRS official stressed that Americans should refrain from filing TurboTax.
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