woman wondering why is my tax refund so low

Why Is My Tax Refund So Low?

“Why is my tax refund so low this year?” Many people ask this question in hope that there might have been a miscalculation, and they’ll have more money coming in.

You wait for it every year — a big, fat tax refund. You use it to cover bills or treat yourself to something nice. Maybe it’s what you rely on to pay for a vacation.

That anticipation makes a low tax refund hit hard. Especially if you desperately need cash after a tough year financially. If you’re asking yourself, “Why is my tax refund so low?” here are some of the possibilities.

Here Are The Reasons Why Your Tax Return Might Be Lower Than Expected

1. A Tax Refund Offset

One of the biggest reasons for people asking themselves, “Why is my tax refund so low?” is that the federal government has offset some of your tax refund. “Offset” is a somewhat nice way to say deducted or reduced.

Sometimes this occurs because money is owed to the federal government, you still have obligations related to state income tax, owe your state unemployment compensation debts or you are past-due on child support.

2. Refundable Credit Adjustments

The past few years were crazy, as the country has been coping with the COVID-19 pandemic. Over that time, tax refunds have been affected by multiple instances of tax credits that were set in advance, such as the expanded Child Tax Credit or COVID-19 recovery rebates for dependent and adult stimulus checks.

These were paid out by the Internal Revenue Service as a kind of “future” tax refund, taken out of your usual one-time tax refund.

3. You Received Unemployment Benefits

If you struggled to find a job during the pandemic and took advantage of expanded unemployment benefits, that income is considered taxable by the federal government and by some states. Those who were unemployed last year had to adjust withholding amounts. If that was not done correctly, the result is a lower-than-expected return.

unemployment benefits making tax refund low

4. You Paid Fees To File Your Taxes Or Paid For A Refund Transfer

You can typically pay to get your refund in advance or, alternatively, pay for tax filing costs via a future refund. Often, companies who handle such actions usually charge processing fees determined by how much your tax filing cost overall. This lowers the refund payment for many tax filers. If you’re looking for an answer to why is my tax refund so low, you may need to talk to your accountant.

5. You Forgot To Claim An Earned Income Tax Credit

One of the largest claimable tax credits for families with a low or moderate income, the Earned Income Tax Credit is one of the most ignored ways to boost your refund. It’s available to anyone who was employed and earned under $51,464 (those filing jointly must have earned less than $57,441), made investments under $10,000, and did not file a foreign earned income statement.

This tax credit can be worth as much as $6,700 for a family with at least three children, so if your tax refund is low, you may have neglected the EITC.

6. There Were Child Tax Credit Changes

The Child Tax Credit was mainly adjusted during last year’s American Rescue Plan, upping the top amount a full $1,000 to $3,000 (or $3,600 for kids younger than 6). The credit was also made fully refundable and eligible families could also see it delivered via direct payments every month in the latter part of 2021.

Because half of the credit could be used last year, that means half, or $1,500 for older children, can just be claimed on this year’s tax form ($500 less than years prior).

7. You Had Your Student Loan Payments Delayed

Many Americans saw their monthly student loan payments stopped during the COVID-19 pandemic, and now such borrowers cannot write off their loan interest on their tax returns. On average, that means about $500 or so less than a typical write-off, leading to a lower return.

Need Financial Help Following A Very Low Tax Refund?

If you’re dealing with a lower-than-expected tax refund, a Delaware installment loan is an option for making up the difference. A Delaware installment loan through Delaware Title Loans, Inc. can provide those who qualify with cash amounts up to $1,500.

A Delaware installment loan is designed to provide you with short-term relief for a short-term financial emergency, such as a big hospital bill, unexpected travel expenses, or much-needed home or car repairs.

All you need is a driver’s license or state-issued I.D., proof of income through your most recent pay stub, and a statement from a checking account in your name. It can take as little as 30 minutes to qualify.

Simply go on our website and fill out the signature installment loan online form, and a loan representative will give you a quick call to walk you through the rest of the loan process. If you approved, you get your cash the same day or the next business day.

man inquiring about delaware installment loans

Get Started Today

Wondering, “Why is my tax refund so low?” Find relief through a Delaware installment loan. Give us a call, go online, or visit us today.

Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.

Louis Tully

Louis Tully is a full-time finance writer offering financial expertise to everyday consumers. He understands the core values of finance and used his writing talents to share his own experiences with money to his readers. His articles teach how financial failures can easily become successes by making new habits and creating realistic goals.