Why is my tax return so low in 2024? Know the reason for this!

Tax season is here, and with it comes the familiar question: “Why is my refund so low this year?” You’re not alone if your 2024 return seems rather low. From income shifts and policy changes to filing hiccups, several factors can contribute to a smaller-than-anticipated refund.

Why is my tax return so low in 2024?

Tax season is upon us, and for many Americans, the question on everyone’s mind is: “Why is my tax return so low this year?” While every taxpayer’s situation is unique, several factors can contribute to a smaller-than-expected refund in 2024. 

Let’s delve into some official IRS information and explore possible reasons why your return might not be as good as you anticipated.

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Understanding the Reasons for Low Tax Return 2024

Tax season is upon us, and for many Americans, the question on everyone’s mind is: “Why is my tax return so low this year?” While every taxpayer’s situation is unique, several factors can contribute to a smaller-than-expected refund in 2024.

Let’s delve into some official IRS information and explore possible reasons why your return might not be as hefty as you anticipated.

Changes in Income or Withholdings:

  • Shifting Tax Brackets: Did your income increase in 2023? While a raise is generally good news, it could push you into a higher tax bracket, resulting in a larger portion of your income being taxed at a higher rate, thereby reducing your overall refund. 
  • Conversely, if your income decreased, you might not have had enough withheld throughout the year, leading to a smaller refund or even owing the IRS money.
  • Adjusted Withholdings: Remember adjusting your W-4 form after a life event like getting married or having a child? 
  • This can affect your paycheck withholdings, potentially leaving less withheld throughout the year and translating to a smaller refund come tax time.

Tax Policy Shifts:

  • Standard Deduction vs. Itemized Deductions: The Tax Cuts and Jobs Act of 2017 significantly increased the standard deduction, making itemized deductions less advantageous for many taxpayers.
  • If you typically itemized deductions but didn’t have enough eligible expenses this year, you might find the standard deduction insufficient to offset your taxable income, leading to a lower refund.
  • Limited Tax Credits: Certain tax credits, like the Earned Income Tax Credit (EITC), Child Tax Credit, and Dependent Care Credit, have specific income eligibility requirements. 
  • If your income exceeds these thresholds, you may no longer qualify for these credits, further impacting your refund size.

Filing Errors or Missing Information:

  • Simple Mistakes: Double-check your return for any mistakes in income reporting, deductions, or credits claimed. Even minor errors can significantly impact your refund amount.
  • Missing Documents: Did you attach all necessary tax forms and documentation? Missing paperwork can delay your return processing and potentially reduce your refund due to incomplete information.

Why is my tax return so low

How to track your tax return Status?

Steps to track your tax return online:

  • Visit the IRS website:
  • Start by going to the official IRS website at https://www.irs.gov/refunds

Locate the “Where’s My Refund?” tool: 

  • On the homepage, you’ll find a prominent link or button labelled “Where’s My Refund?”. Click on it to access the tracking tool.

Provide necessary information:

  • Social Security Number (SSN): Enter your SSN, ensuring accuracy.
  • Filing status: Make your choice from the available options (e.g., Head of Household, Married Filing Jointly, and Single).
  • Refund amount: Enter the exact amount of your anticipated refund from your tax return.

Submit and view results: 

  • After entering the necessary data, press the “Submit” button.The tool will then display the current status of your refund, typically indicating one of the following:
    • Tax Return Received: Your tax return has been received by the IRS, which is now processing it.
    • Refund Approved: Your refund has been approved and is scheduled for delivery.
    • Refund Sent: Your refund has been issued and is on its way to you.

Who qualifies for a refund?

Individuals meeting the following criteria are eligible for a refund:

  • Overpaid taxes: If you paid more in taxes than owed, whether through withholding or estimated payments.
  • Claiming refundable credits: Certain credits, like Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC), can provide additional money, even if you owe no taxes.
  • Filed a return: Filing a tax return is necessary to claim any potential refund, regardless of income tax withholding.
  • Valid Social Security number or ITIN: A valid Social Security number or Individual Taxpayer Identification Number (ITIN) is required to claim a refund.
  • Citizens of the United States or residents of other countries are qualified for tax return.

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