Last year, the average American received a tax return worth $2,827—up 13.24 percent from the year prior. This is thanks in part to federal initiatives like tax credits bolstering returns. If you’ve already filed your 2021 taxes this year and you were expecting a certain dollar value but only received half of it, there could be a few reasons why.
Here’s a rundown of the reasons why some federal tax returns are lower than expected, and whether there’s anything you can do to get more.
Did you split your federal tax return between two bank accounts?
According to the Internal Revenue Service (IRS), you have the option to split your direct deposit tax return between different bank accounts. You can choose to split the refund between two or three accounts, depending on your preference. These accounts can be spread across up to three different financial institutions.
Since 80 percent of taxpayers receive their refund as a direct deposit, it’s possible that you chose this option and are only seeing half or part of your money in an account. Check your other accounts to see if the remaining return is already in your account.
Government debts could have taken some of your federal tax refund.
If you owe any money to the government, they may take it directly from your federal tax refund. This could account for why the return is lower than expected. Some examples of government debts include unpaid and overdue:
Child support payments
Federal tax debts
Federal non-tax debts
Unemployment compensation debts
Federal student loan debts (when payments and interest are not paused)
Other federal loan debts (including Small Business Administration, Department of Housing and Urban Development, and more)
When the government uses your tax refund to pay debts, this is called a tax offset.
What to expect if the government took part of your refund to pay debts.
The IRS will let you know if your refund is lower because of unpaid taxes. If your refund is lower because of other government debts, the government will also let you know. In this case, you’ll receive a letter from the U.S. Department of the Treasury’s Bureau of Fiscal Services (BFS), who will outline the original amount of your refund, the offset amount used to pay off debts, which agency is responsible for taking the money, and the agency’s contact information if you want to get in touch.
Another reason: The IRS may have fixed an error on your return.
Due to tax incentives like the Child Tax Credit, stimulus payments, and other modern-day tax nuances, discrepancies are commonplace. When the IRS reviews your taxes, the organization may take the responsibility of fixing any errors. If the IRS makes a change on your filed taxes, your refund may change. If it’s lower, your refund will be less than originally stated. In this case, the IRS will notify you by mail.