Tax refunds are flowing, but IRS is seeing fewer early returns filed so far this season
Tax refunds are flowing, but IRS is seeing fewer early returns filed so far this season
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Year-end tax prep tips
IRS officials say now is the time to get organized for the upcoming tax season.
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The average federal income tax refund was $2,065 through Feb. 7.
The IRS has received fewer returns in the first two weeks of the 2025 season than it received a year ago.
Tax season continued its sluggish start into early February, but tax refunds continued to steadily roll out the door.
Every tax season has its own quirks and nuances. Oddly enough, though, the Internal Revenue Service has received 7.7% fewer returns so far this year. The agency also has processed 7.6% fewer returns through Feb. 7, according to the latest data published Friday.
Why the delays?
A variety of factors could be coming into play and keeping many people from filing their returns early in the game, including misleading online tax advice via social media, a flood of 1099-K forms, political rancor, some delayed deadlines in states hit by federal disasters, and the calendar itself.
How much money are people seeing in tax refunds?
The average federal income tax refund was $2,065 during this first two weeks of this year's tax season through Feb. 7, according to the IRS. That's up 18.6% from last year's tax season through Feb. 9, 2024.
Many times, those filing tax returns in late January and early February want to receive their refund cash as early as possible.
If you file your federal income tax return on Feb. 17, for example, you might anticipate a tax refund by Feb. 28 if you e-file, request that the refund by directly deposited into a bank account and the IRS has no problems with the return.
If you e-file the return Feb. 17 but want a paper refund check mailed to you, you could have to wait until March 7, according to estimates by CPA Practice Advisor, a resource for tax professionals. The publication notes that filing during peak season, which runs from late March through April 15, can result in slightly longer waits.
Many people who claim the earned income tax credit or the additional child tax credit need to anticipate delays. The IRS said taxpayers claiming those credits can expect to get refunds by March 3. That's if you file your return online, opt to get your refund by direct deposit, and have no issues with your tax return.
Some taxpayers, the IRS said, may receive their income tax refunds a few days earlier. The IRS "Where's My Refund?" tool is expected to show an updated status by Feb. 22 for most early filers who claimed the earned income tax credit or the additional child tax credit.
The IRS expects filing season numbers to even out as more tax returns come in during the weeks ahead and as the April 15 filing deadline for most taxpayers approaches.
How change in Washington has some rethinking their taxes
It's hard to judge why people could be putting off filing their taxes. But one reason could be that the new Trump administration isn't like the first Trump administration. We're seeing a lot of swift moves and, in some cases, outright chaos as President Donald Trump attempts to cut spending, offers buyouts and takes other dramatic steps to downsize the federal government.
After taking office Jan. 20, Trump issued a slew of executive orders. And some people wrongly might have thought that key tax breaks could hit their 2024 returns simply by executive order. It's not true.
Some social media buzz even suggested that Trump's proposed "External Revenue Agency" would replace the IRS and eliminate income taxes. But Trump did not eliminate the IRS or put an end to income taxes.
The tax breaks proposed on the campaign trail, such as no taxes on tips, are highly unlikely to come into play on 2024 returns retroactively the closer we get to April.
Mark Steber, chief tax officer at Jackson Hewitt Tax Service, said some bad information is floating on social media suggesting that taxpayers "wait and the IRS may go away.' Others suggest that changes will hit the IRS "and you will not owe taxes.'
Steber said that kind of silliness could have people delaying filing their tax returns for no good reason.
"I see virtually no chance of retroactive tax administration on political promises from the election," Steber said.
"If the changes happen at all, political statements rarely end up exactly as tax law changes and let alone retroactively," he said.
It's just hard to do, he added.
Tax law changes require a lot of agreement in Congress, where Republicans have slim majorities in both the House and Senate. There's much uncertainty about what will actually be proposed until Republicans in Congress get behind a particular tax plan.
When is Tax Day 2025? All about deductions, income brackets, credits and deadlines
"I think the 2026 tax year be the first year of real substantive change," Steber said. If so, taxpayers could see those changes when they file 2026 returns in 2027.
Several other factors, beyond potential tax cuts, could be contributing to a bit of a slowdown in the early tax season. They include:
A change in the tax season kickoff date
The 2025 tax season started two days earlier in 2025 than 2024, which one might imagine would generate more filings by now. But it didn't. The IRS has an explanation for that one.
This year, the IRS began accepting and processing e-filed income tax returns for individuals starting Jan. 27. Last year's tax season started Jan. 29 and the initial week's data ran through Feb. 2.
The IRS reasoned initially that many people this year didn't file in the first week because they might have still been waiting for key paperwork. Theoretically, the Jan. 29 kickoff last year was closer to a Jan. 31 deadline for W-2 forms to be issued by employers. The W-2 is a key form that reports income and tax withholdings. It's possible people had more paperwork in hand at the start of the season last year.
Many times, of course, tax filers now are able to get W-2 information online and avoid waiting for the documents to be sent in the mail.
The latest numbers do show improvements from the first week when the IRS processed 15.8% fewer returns than a year ago. During that week, the IRS reported that it received 14% fewer returns during the first week of the tax season compared with last year.
An expected flood of 1099-K forms
More gig workers are likely to receive a 1099-K this year that pinpoints how much money they made from these short-term jobs in 2024 — and some could be taking more time with their tax returns to figure out what to do.
Profits on the sale of things, like concert tickets, and money earned working a side hustle, such as delivering food, were always taxable. This year, though, some changes in the reporting rules mean more more people are getting tax forms that track the money.
Steber, at Jackson Hewitt Tax Service, said the larger number of tax forms, such as 1099-K forms and other forms, could be creating a feeling among some people that it's better to "wait until I have all my stuff."
And that's a good idea because you want to file an accurate return.
The 1099-K will usually arrive in late January or early February.
It wouldn't surprise me if many people are holding back to see what they need to do with a 1099-K if they never had to deal with one in the past.
This year, taxpayers will receive a 1099-K from payment card companies, payment apps, and online marketplaces when the amount of their business transactions during 2024 was more than $5,000.
Under the old standard, the 1099-K was only sent to those who had received more than $20,000 and had more than 200 transactions on third-party payment processing platforms in 2023 and earlier years.
The IRS receives these documents, too, meaning that a lower threshold means a bigger paper trail for 2024 income.
This same $5,000 threshold could apply if you sold Taylor Swift or Detroit Lions tickets through an online marketplace, such as StubHub, in 2024. The profit you made on those tickets would be taxable.
Overall confusion out of Washington
The IRS is dealing with its own disruptions this tax season, too. The White House initiated a hiring freeze at the IRS, which could be much longer than those hiring freezes facing other federal agencies.
Operations at the IRS are reportedly under review by Elon Musk's cost-cutting group, according to reports in Reuters and elsewhere.
Trump sent an email Saturday to supporters asking: "Are you sick of being harassed by the IRS? Well, maybe it's time that somebody audited them for a change."
The headline on the email: "Should I audit the IRS into oblivion?"
At one point, buzz was building that a new free online IRS service called Direct File had been killed by Musk, whom Trump has given broad authority to run a new 'Department of Government Efficiency."
IRS Direct File was expanded to 25 states for 2024 tax returns. A post on X by Musk said: "That group has been deleted," triggering rumors in early February that Direct File was no more.
Many residents in these 25 states — but not all tax filers — are still able to use Direct File when they're filing their state and federal income taxes this year.
More than 30 million taxpayers in nearly half of the country can take advantage of the new, free program to prepare and file their federal income taxes online directly with the IRS.
Disaster relief
Millions of taxpayers can wait to file past the April 15 deadline based on federal disaster relief. While they might want to file earlier, they might also need to take their time.
Taxpayers in the entire states of Alabama, Florida, Georgia, North Carolina and South Carolina, and parts of Alaska, New Mexico, Tennessee, Virginia and West Virginia will have until May 1 to file their 2024 returns and pay any tax due. In addition, these taxpayers also would have until May 1 to file their 2023 returns.
On Jan. 10, the IRS announced an extension for victims of California wildfires. The tax relief applies to individuals and businesses in southern California affected by wildfires and straight-line winds that began Jan. 7.
These taxpayers in California now have until Oct. 15 to file their 2024 returns and pay their federal income taxes, based on disaster relief in any area designated by the Federal Emergency Management Agency.
Many times, people want to file early to obtain their refund money. But many will wait, nonetheless, if they're dealing with the aftermath of a disaster.
Make no mistake, plenty of people have filed their tax returns early this year. The IRS data indicated that the agency received 23.58 million returns through Feb. 7. The IRS processed 23.5 million returns through the first two weeks.
It is key to note, though, that the IRS number for total tax returns processed includes tax returns received in the prior or current year and processed in 2025. The IRS hasn't processed nearly every 2024 tax return that it has received this year.
Matt Hetherwick, chief program officer for the nonprofit Accounting Aid Society in Detroit, said overall the nonprofit is actually seeing an increase in the number of tax returns prepared during the first weeks of this year's tax season.
"Our appointment scheduling is also seeing an increase in demand when compared to the same time last year," Hetherwick said.
Much of the tax work, he said, seems to be on track at this point.
"It is still very early in the filing season, so the earliest of filers would typically just now be getting refunds back," Hetherwick said.
"We are busy, and we have not received any calls from clients concerned with the length of time it's taken to receive their tax refund."
Contact personal finance columnist Susan Tompor: stompor@freepress.com. Follow her on X @tompor.
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