IRS: Tax refunds average $3,207 so far as many anticipate cash this week

Early tax filers jump on getting their taxes done weeks before the April 15 deadline often for one reason: They want to get their tax refund cash as early as possible — and many should have their hands on their federal income tax refunds by this week.

"For many people, this is the biggest check they will see all year," IRS Commissioner Danny Werfel said in a news briefing Monday.

This week, many who filed early and claimed the earned income tax credit on their 2023 returns should receive their federal income tax refunds by Tuesday.

The IRS announced earlier that the agency had a target date of Feb. 27 for when many early filers could expect to see most refunds related to the federal earned income tax credit or the additional child tax credit to be in bank accounts or on debit cards under key conditions. Much depends on whether the tax filer electronically files the tax return, chooses direct deposit, and the IRS has no other issues with the return, the IRS said.

By law, the IRS cannot issue federal refunds before mid-February when the return claims the earned income tax credit or the additional child tax credit. The IRS must delay issuing those refunds in order to avoid fraudulent claims early in the season.

The IRS rolled out its latest data on the tax season on Friday.

Federal income tax refunds issued through Feb. 16 hit $3,207 on average, according to the most recent report. That's up 2.1% from an average of $3,140 for the same timeframe a year ago.

The latest numbers show that more refunds had been issued through mid-February. By contrast, the average federal income refund was only $1,741 based on IRS data through Feb. 9. That was down 12.8% from an average of $1,997 through Feb. 10, 2023.

The IRS said latest data should include some refunds related to earned income tax credit and the additional child tax credit. The PATH Act requires that the IRS must withhold refunds until Feb. 15 each year for filers who claim the earned income tax credit or the additional child tax credit to allow more time for the IRS to prevent fraud.

Last year, the average federal income tax refund was $3,167 based on IRS data through Dec. 29, down 2.6% from the same period in 2022.

The IRS said it tends to issue more than 9 out of 10 refunds in less than 21 days. But some returns take longer to review.

It's somewhat difficult to compare the early days of the tax season this year with last year, thanks to a later kick off for tax operations. The IRS began processing e-filed returns on Jan. 29, which is roughly a week later than the Jan. 23 start date last year.

The IRS indicated that tax season statistics continue to show a strong start to the current tax season "with all systems running well."

More: Earned income tax credit: What kind of income counts, who is eligible for 2023 returns

More: Tax refunds from Michigan, IRS: How to check status of state, federal returns in 2024

The IRS processed 34.5 million individual income tax returns through Feb. 16, down 6% from the year ago data through Feb. 17, 2023. The IRS received 34.74 million individual income tax returns through Feb. 16, down 5.7% from a year ago.

The IRS has issued nearly $67 billion in refunds to tax filers through Feb. 16, which is down 23.2% from the same time last year.

The earned income tax credit helps drive up tax refunds for many lower income and middle income working families, and remains a key part of covering essentials, such as heating bills, groceries, and rent.

While the Feb. 27 date is a target, the IRS noted that "some taxpayers may see their refunds a few days earlier."

The IRS advises filers to check the "Where’s My Refund?" tool at IRS.gov for an individual's personalized refund date. The tool was expected to show an updated status by Feb. 17 for most early filers who claimed the earned income tax credit or the additional child tax credit.

You can check your federal income refund status 24 hours after you e-file a current-year return. You need your Social Security or individual taxpayer ID number, your filing status and the exact refund amount on your return.

The IRS has said it is adding improvements to its online refund tool to offer clearer updates, including whether the IRS needs them to respond to a letter requesting additional information.

The IRS noted that banks might need more time to accept a direct deposit or issue a debit card. Many institutions don’t process payments on weekends or holidays.

The dollar amount that individuals receive when claiming the federal earned income tax credit varies dramatically based on family size, income and filing status. You need to have worked or have earned income in 2023.

The maximum earned income tax credit is $7,430 in 2023 for an eligible family with three or more qualifying children. That is up from a maximum of $6,935 in 2022.

With one qualifying child, the federal credit can be up to $3,995 in 2023.

More: Tax refunds from Michigan, IRS: How to check status of state, federal returns in 2024

Last year, about 23 million workers and their families received roughly $57 billion in the federal earned income tax credit as of December 2023, according to IRS data. The average amount received nationwide was about $2,541.

In Michigan, about 664,000 lower to middle income workers and families received $1.7 billion for the federal earned income tax credit after filing a 2022 federal tax return. The average EITC amount received in Michigan was $2,587 last year.

This year, Michigan families have even more reason, if they qualify, to file for both the federal and state income tax returns to claim the earned income tax credit. Under a new law, Michigan's earned income tax credit now is calculated based on 30% of the federal credit in 2023, instead of what had been 6% under the old rules.

Contact personal finance columnist Susan Tompor: stompor@freepress.com. Follow her on X (Twitter) @tompor.

This article originally appeared on Detroit Free Press: Tax refunds average $3,207 so far as some anticipate cash Feb. 27