Taxpayers across America may have reason to anticipate larger refunds this year, as a tax expert predicts historic increases due to inflation. Mark Steber, Chief Tax Information Officer at Jackson Hewitt, explained that families whose incomes did not outpace inflation are likely to benefit. Steber emphasized that these projections are not mere speculation but based on concrete economic principles.
Inflation, which soared in 2023, has led to significant adjustments in federal tax income brackets and standard deductions. This year, these adjustments have seen a substantial increase of about 7.1%, outstripping the average earnings increase of 5.5% for Americans in 2023. The purpose of these adjustments is to protect taxpayers from bracket creep, where individuals are pushed into higher income brackets without a corresponding increase in purchasing power.
Steber highlighted the importance of these adjustments for lower to moderate-income families, who often struggle to keep pace with inflation. He noted that the anticipated 10% increase in average refunds could provide some relief for these groups, offering a better financial situation amidst rising costs.
The IRS estimates approximately 128.7 million returns this year, with the deadline for most taxpayers set for April 15, 2024. Taxpayers aiming for swift refunds are advised to file electronically and ensure accuracy to avoid delays or the need for additional review due to errors or suspected fraud.
In related news, taxpayers are cautioned about filing with certain systems, with an ex-IRS employee advising against using TurboTax. This caution comes amidst recommendations for seamless filing systems without fees.
As taxpayers await their returns, the anticipated increase in refunds offers a glimmer of financial relief for many Americans amidst ongoing economic challenges.
By incorporating the latest economic forecasts and expert insights, taxpayers can better navigate this year’s tax season with an eye toward maximizing potential refunds.