As tax season rolls in, many Americans may see a bump in their refunds, with a potential increase worth celebrating, especially for homeowners doing the math on their 2023 taxes. According to FOX Business, nearly three-quarters of filers received a refund in 2023, but the average amount decreased slightly from the previous year. This time around, Mark Steber, chief tax information officer at Jackson Hewitt, predicts some could get up to 10% more back - amounting to roughly $300 to $400 extra.
The IRS' annual inflation adjustments are behind the bump. To counter "bracket creep," where taxpayers are nudged into higher tax brackets without actual gains in purchasing power, the IRS has raised the federal income tax bracket and standard deduction by about 7.1% - handily outpacing the median worker's 5.5% income increase. This is meant to let those whose earnings didn’t quite keep up with inflation to potentially hold onto more of their money come tax time. "For anybody whose income did not outpace inflation, they should do better," Steber told FOX Business. "It's not even voodoo or marketing spin, it's pretty much just science."
In a separate bonus for homeowners, the perks of property-related deductions may become particularly evident when filing their taxes. According to CBS News, homeowners may see an increase in their tax refund, thanks largely to deductions like the mortgage interest deduction. Homeowners can deduct the interest paid on their mortgage, converting what was a sting in their monthly budget – thanks to skyrocketing interest rates in 2023 – into a boon at tax time.
Filers should swiftly to submit their taxes by April 15 to ensure prompt processing and take advantage of the 21-day refund window. It’s important to file electronically, make sure all documents are accurate and complete, and opt for direct deposit to get refunds fast. "Once you're relatively certain that you have all of your tax documents, file as soon as you can so that you can start investing your money," Eric Bronnenkant, head of tax at Betterment, recommended to FOX Business. The IRS, on guard for errors or potential fraud, cautions that some returns could need more scrutiny and, hence, more time to process.
