The IRS has issued nearly 8 million tax refunds. Here’s the average payment

Tax season is underway, and the IRS has issued nearly 8 million refunds worth about $15.7 billion as of Feb. 3, the agency reported.

The average refund amount was $1,963, down from last year’s average payment of $2,201 at the same point in the filing season. Of course, the average may change as the IRS processes millions more returns before the April 18 deadline.

While the agency warned refunds may be “somewhat lower” this season, experts say it’s still too early to know for sure.

As of Feb. 3, the IRS had processed more than 16.7 million returns, 29% more than the previous year, according to the report released last Friday. The nearly 8 million refunds compare to around 4.3 million the previous year.

With almost 85% more refunds issued, the larger number of payments may be reducing the average refund size compared to last season’s payment, said Bill Smith, national director of tax technical services at CBIZ MHM’s national tax office.

Still, “it’s tough to draw too much of a conclusion over a relatively short period of time,” said Eric Bronnenkant, head of tax at Betterment, a digital investment advisor. 

“I think the processing percentage is very telling,” said Smith, noting that the IRS might be more efficient without added pandemic duties and a smaller backlog of unprocessed returns.

The agency kicked off the tax season with a bigger customer service team and enhanced technology as it begins to deploy its nearly $80 billion in funding that Congress approved in August.  

“We have begun to see the light at the end of the tunnel,” National Taxpayer Advocate Erin Collins wrote in her January report to Congress. “I am just not sure how much further we have to travel before we see sunlight.”

Smith said he’s curious to see how quickly refunds will reach electronic filers this season. “That’s the one statistic people really want to know,” he said.

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