I recently filed my tax return and was surprised to see that my refund is much lower than expected. I’m single, don’t own property, and my only income is from my job. I even have an HSA, which I thought would help. I used TurboTax’s deluxe version, but the refund amount still seems off. Can anyone help me understand why my tax return is so low? What factors might I be overlooking? Any advice or insights would be greatly appreciated!
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The low tax return is what you WANT. This indicates that you were fairly taxed by your employer over the year and that you received your money upfront rather than having the government withhold it for several months.
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In my opinion, receiving a reduced tax refund is a positive thing. A reduced refund, especially in an inflationary era, means you received more money upfront and provided the IRS with a smaller interest-free loan over the previous year.
If you are not manually amending your W-4, your employer is accurately computing your withholdings.
Your tax return could be lower than expected because of:
- Changes in income, like a raise or job change, affect tax withholding.
- Potential deductions or credits that were missed.
- Government debts that reduce your refund.
- Changes in tax laws that impact credits or deductions.