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Intuit TurboTax April Report A Look at Refunds and Shifts in the Child Tax Credit (1440 x 600 px)
Intuit TurboTax April Report A Look at Refunds and Shifts in the Child Tax Credit (411 x 600 px) (2)

Intuit TurboTax April Tax Trends Report: A Look at Refunds and Shifts in the Child Tax Credit

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Our aggregated and anonymized Federal income tax return data in compliance with U.S. regulatory requirements, pulled from January 29, 2024 to March 21, 2024, provides a unique view into tax filers who submit their returns at least 3 weeks before the tax filing deadline. This population of tax filers tends to be younger or in the oldest age group, is generally in the lower income tax brackets, and is more likely to receive a refund. Our aim is to provide a lens through which this group of tax filers and tax situations can be better understood.

In December, Intuit TurboTax released our Tax Trends Report, looking back at tax year 2022, which highlighted insights into refunds, employment, income, and crypto investing from the previous tax year. TurboTax has continued to analyze anonymized tax data during the current filing season, with a focus on topics that have been of key interest this year, namely refund amounts and the Child Tax Credit. Using anonymized and aggregated data in compliance with regulatory requirements, we’ve pulled insights reflecting the general population of U.S. tax filers rather than just the TurboTax customers who have filed.

Data Reveals Slowing in Declines in Tax Filers Receiving Tax Refunds and Slight Increase in Tax Filers Claiming Child Tax Credit

Key Findings:

Refunds: The percentage of tax filers in the lowest income tax bracket saw a slowing in the decline of refunds compared to tax years 2021 and 2022, evidence that the elimination of COVID-related tax credits had an impact on refunds.

  • 57% of single tax filers from the lowest income category have received a refund — which is only a slight change from tax year 2022 where 60.2% of single filers received one, and a significant shift from 74.8% in tax year 2021

Child Tax Credit: There is a slight increase in filers who received the Child Tax Credit to date (31.7%) compared to 30.9% in tax year 2022

Rate of Decline in Refunds Among Lower Income Filers is Leveling Out

57% of single tax filers from the lowest income category have received a refund which is only a slight change from tax year 2022 at 60.2% and a significant shift from 74.8% in tax year 2021.

Tax refunds are always the hot topic of the tax season.  After all, the IRS reported the average refund was over $3,000 last season and this is a trend we continue to see year over year with the majority of tax filers receiving tax refunds.  According to IRS latest tax filing statistics for the period ended March 22, tax refunds are up over 6%. For many filers refunds are the biggest check they receive all year. 

There has been a particular focus on refunds since tax year 2022 when COVID relief went away and tax provisions reverted to pre-COVID amounts.  We began analyzing data last year and compared tax year 2021 refunds to tax year 2022 refunds, particularly among lower income filers.  What we found was a significant decline in filers receiving refunds in tax year 2022 (60.2%) compared to tax year 2021(74.8%).  When looking at tax year 2023 taxes filed through March 21, 2024, we found that the rate of decline is leveling out as stated above.

Explanation of Refund Trends

The trend we are seeing with lower refunds leveling out among tax filers in the lowest tax brackets can be explained by the time period where significant COVID relief provisions reverted to pre-COVID tax benefits, particularly the Child and Dependent Care Credit and the Child Tax Credit.  Our analysis first revealed a dip in the percentage of filers receiving a tax refund timed to the lowering of these credits.

Our data uncovers a bright side when it comes to refunds. The rate of decline in refunds among lower income filers is softening, providing clarity on refund trends. The latest IRS latest stats also shows that the average refund amount is up for tax year 2023 as of March 22, 2024.

Tax and Finance Implications of Refunds

Tax filers who have not filed yet should keep in mind that they can still claim tax credits for parents, like the Child Tax Credit and the Child and Dependent Care Credit. The credits only reverted to what they were prior to COVID relief, but they are still available. Tax filers who still need to file should gather all of their documents and receipts for deductible expenses whether they do their taxes themselves or have a tax pro prepare their taxes for them. Having all documents in one place assures filers don’t forget anything so they can maximize their tax refund.

Tax filers earning income under the IRS filing threshold should be aware that every year the IRS announces over $1 billion in unclaimed refunds.  A recent OnePoll survey, in partnership with TurboTax, found that close to two-thirds (68%) of Gen Z tax filers were unsure or didn’t know that they could receive a tax refund while making under the IRS’ income requirement. 

Much of the unclaimed refunds belong to lower income filers who think they shouldn’t file because they earn less than the IRS income filing threshold ($13,850 single, $27,700 married filing jointly, $20,800 head of household). Those tax filers could be leaving money on the table if they had federal taxes withheld from their paychecks or if they are eligible for refundable credits like the Earned Income Tax Credit worth up to $7,430 for a family with three children. 

Tax filers can also boost their finances when they receive a refund by using it to pay off debt or invest in a retirement fund.  Investing in a 401-K retirement plan can be a win especially if employers match investments in retirement plans. Even better, lower income tax filers who meet the maximum adjusted gross income limits and work requirements will be eligible for the Saver’s Credit up to $1,000 for single filers and up to $2,000 for married filing jointly when they invest in their retirement plans.

Child Tax Credit 

Shifts in CTC and ACTC as COVID tax policies expire

There is a slight increase in filers who received the Child Tax Credit for the 2023 tax year filings to date (31.7%) compared to 30.9% in tax year 2022.  

The Child Tax Credit continued to be the topic of conversation throughout the season, with news of there being a possible expansion of the credit and that the credit is another significant tax benefit for parents. According to the Tax Policy Center an estimated 90% of families with children received an average Child Tax Credit of $2,390 in tax year 2022, however families with lower income were least likely to benefit from CTC because their earnings were insufficient to qualify for the credit.  

Shifts could be seen in the filers who received Child Tax Credit comparing 2021 (when COVID relief was available), to tax year 2022 and 2023 (the years provisions reverted to pre-COVID relief).

COVID relief provided an increased credit amount of $3,600 versus the pre-COVID amount of $2,000. In addition, the dependent age requirement was increased to 17 and under as opposed to the pre-COVID relief age of 16 and under, expanding the eligibility for the tax credit in tax year 2021. Under COVID relief the credit was also fully refundable, which meant that tax filers were able to get the Additional Child Tax Credit or refundable portion up to the full credit amount without owing taxes.  After COVID relief went away, the refundable portion was up to $1,500 in tax year 2022 and up to $1,600 in 2023, which means tax filers have to owe taxes up to $2,000 in order to get the full credit in tax year 2022 and tax year 2023. 

Tax Implications of Child Tax Credit

Recent buzz around the Child Tax Credit expansion following House approval has caused parents to question whether or not they should hold off on filing, but as the tax deadline draws near, tax filers should not hold off on filing. IRS commissioner Danny Werfel encourages tax filers to file and not wait for Congress. IRS commissioner Werfel provided additional assurance and said that if there is change that impacts tax filers returns, the IRS will make the change, and will send filers updates — whether it’s an additional refund or otherwise — without tax filers having to take additional steps.

Tax filers also have additional incentives to file since they may be eligible for other credits for children like the Child and Dependent Care Credit up to $1,050 for one child and up to $2,100 for two kids, and the Earned Income Tax Credit up to $7,430 for a family with three kids. Plus the average refund was over $3,000 last year, which can be the biggest check people see all year.
TurboTax has tax filers covered and is up to date with the latest tax laws so filers can file their taxes with confidence and accurately claim the Child Tax Credit if eligible. There is no need to delay filing. Tax Filers who have not filed yet should file now to get their refund as soon as possible. Should tax laws change, TurboTax will be updated quickly as with previous tax law changes and will help ensure tax filers receive the maximum refund they are eligible for.

Methodology: Findings included in this document are drawn from more than 6 million US TurboTax anonymized returns, sampled to better reflect the IRS tax filer base in the United States AG. To ensure consistency in year-over-year comparisons, all users included have filed their taxes using TurboTax every Tax Year since 2021. All data has been anonymized and aggregated in compliance with US tax regulation requirements. Only segments with 1,000 filers or more are displayed in visualizations.

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