Why IRS Issued Double the Refunds in 2021 — and Why It Probably Won’t This Year
Written by Heather Taylor
Edited by Chris Cluff
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Tax refunds for the 2020 tax year, paid in 2021, were significantly above average. Can American taxpayers filing in 2022 anticipate a similar amount, or another round of double refunds?
Why IRS Issued Double the Refunds in 2021
The number of refunds in 2021 was more than double the number in 2020, and the amount of money refunded was about 63% more, according to state data from the IRS. More than 303 million refunds were issued, up from almost 122 million in 2020; the total refund amount jumped from $452 million to $763 million.
Eric Bronnenkant — CPA, CFP and head of tax at investment advisor Betterment — said many taxpayers received stimulus checks in 2020 based on their 2018 or 2019 adjusted gross income. Then, for many people, AGI declined in 2020 due to unprecedented layoffs.
“The silver lining was the fact that they had another opportunity to claim the stimulus check based upon actual 2020 AGI when filing in 2021,” Bronnenkant said.
Paul Miller, CPA at Miller & Company, LLP, said another reason tax refunds doubled in 2021 was that some taxpayers did not receive their stimulus checks of $1,400 per family member. The IRS website said people whose initial payment was less than the full amount received a “plus-up payment” when they filed a 2020 return and information on that return indicated that they qualified for a larger payment.
The American Rescue Plan also increased the child tax credit amount for 2021. Before 2021, the credit was worth up to $2,000 per eligible child.
“The American Rescue Plan provided families with a child tax credit of $3,000 per child and $3,600 for children 5 and under,” Miller said. “It was a significant increase per family.”
Will Americans Receive Bigger Tax Refunds in 2022?
Taxpayers filing their 2021 tax return in 2022 may get a boost to their refund if they didn’t get the full amount of the third stimulus check and are entitled to more. However, Bronnenkant said these payments are not likely to be as large as the previous year due to the significant recovery of the U.S. economy.
The expanded child tax credit is in effect for 2022, but Miller said this credit is $1,000 to $1,600 per child, depending on your child’s age.
What You Can Expect in Refunds This Year
If you expect to receive a refund in 2022, the IRS said it issues nine out of 10 refunds in less than 21 days. If you filed early and claimed the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC), you should have received your refund by March 1 — assuming you filed your return online, chose to get your refund by direct deposit and the IRS found no issues with your return.
Some tax returns may require additional review and take longer. You may use the Where’s My Refund? tool available from the IRS that uses a tracker to determine when your refund was received, approved and sent. Learn about your refund status, get a personalized refund date and receive additional help regarding your tax refund using this tool.
If you need further assistance, IRS phone representatives can research the status of your refund — especially if it has been 21 days or more since you filed electronically, more than six weeks since you mailed your paper return or if the Where’s My Refund? tool directs you to contact the IRS.
Contact the IRS at 800-829-1040 for questions about tax returns and refunds. In case of a hearing impairment, call 800-829-4933.
The IRS takes protecting your identity seriously and expects you to verify your Social Security or individual taxpayer identification number, date of birth, filing status, information from your prior year’s return and a copy of the return you’re calling about to verify you are who you say you are.
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