Why Is My Tax Refund So Low? And Other Questions Answered
As tax refund checks start rolling in for some, others are just getting started with filing taxes, and more than a few are asking questions like - “why is my tax refund so low?!” We have got answers.
Let Us Help You Know Why Your Tax Refund Is So Low
Q: Why Is My Tax Refund So Low?
A: There are a few reasons you may ask - "Why is my tax refund so low?” One of the most common reasons for this year is a change in tax credits due to the pandemic.
For example, individuals who collected unemployment this past year will report lower income than usual, and this means a lower earned income tax credit. A lower EITC has many people asking "why is my tax refund so low!"
Another reason you may ask - “why is my tax refund so low?” is that you owe a debt to the IRS. For example, if you owe on a previous year's taxes, the IRS can take what you owe out of this year's refund (and they do not have to get your permission to do it!)
Lastly, you may ask - “why is my tax refund so low?” this year because you became self-employed. Self-employment carries a host of new tax considerations including the need to pay estimated taxes which may be why you are not getting your usual refund amount on your taxes this year!
Q: Why Can’t My Tax Refund Be Direct Deposited?
A: Wondering why your tax refund cannot be direct deposited? This year’s Earned Income Credit allows filers to base their EITC on 2019 income. If you selected the option to use 2019 income to calculate your EITC, your refund will get mailed to you via check, it cannot be direct deposited.
Another reason your tax refund may not be direct deposited into your account is that you made a mistake in transcribing your bank account details.
- If you missed a digit when transcribing your account details, expect to receive a paper check.
- If you entered an incorrect digit when transcribing your account details and your bank rejects the transfer, expect to receive a paper check.
- If you entered an incorrect digit when transcribing your account details and that account belongs to someone else, you will need to work directly with your bank to recover the deposit.
Q: Why Is My Standard Deduction So High?
A: The Coronavirus pandemic prompted several tax changes, included among these is an increase in the standard deduction. In 2019, a single filer could claim a standard deduction of $12,200, a head of the household could claim $18,350, a married couple filing jointly could claim $24,400, and a married couple filing separately can claim $12,200.
For 2020, a single filer can claim a standard deduction of $12,400 ($14,050 if over 65,) a head of the household can claim $18.650, a married couple filing jointly can claim $24,800 ($26,100 if one partner is 65 or over, and $27,400 if both partners are 65 or over,) and a married couple filing separately can claim $12,400 ($14,050 if over 65.)
Q: Why Can’t I Claim The Earned Income Tax Credit?
A: The most common reason for being unable to claim the EITC is that you are married but filing your taxes separately from your spouse.
You may also be unable to claim the EITC if you filed form 2555 (foreign income) or if you or your spouse are non-resident aliens.
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Did A Low Tax Refund Leave You In A Pinch?
Asking - “why is my tax refund so low?” If your low tax refund has left you in a pinch because you had been depending on that refund check to cover medical bills, consider installment loans Texas Title and Payday Loan Services can help. Borrow what you need today for those emergent expenses and repay in easy installments!
Don’t be left wondering how your tax refund could possibly be so low, do something about it today. Take our advice and look into what installment loans Texas can do for you!
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.