Taxes 2022: Why taxpayers are seeing higher refunds this year

Yahoo Finance's Akiko Fujita and Brian Cheung discuss today's chart of the day, which shows that the average tax refund is 9.9% higher year over year.

Video Transcript

BRIAN CHEUNG: Well, Akiko, it's time for our chart of the day, and this one keeping in the theme of Tax Day, April 18. The IRS says that people are getting bigger tax refunds this year compared to last year. Take a look at this. $3,200 is the average refund-- so far. That's as of April 8. Again, we've got to see another week or so of filings, according to the IRS. We'll see if they update that data. That compares to about $2,900 in 2021. Actually, this is about a 10% increase, so maybe perhaps pacing above inflation. But Akiko, you do wonder, might people be spending some of this tax [INAUDIBLE]

AKIKO FUJITA: Well, that's going to be an interesting question to see how it all plays out. But my question is where these refunds are coming from. You mentioned the child tax credit being a big part of this.

BRIAN CHEUNG: Going to be a big part, yep. Yeah, and I think certainly, there's just a number of other components as well. You do wonder about just a lot of people having filed for any sort of tax implications that could have came from the stimulus checks. That, obviously, factored into 2021 for the most part. A lot of that stimulus was factored into 2020's tax refunds.

So when you think about the windfall that people got-- and some of that may have even reflected a year earlier, so this might just be a component of people having larger incomes. We've seen wage increases over the course of 2021. Maybe larger withholdings from their corporate employers meant that they got a little bit extra.

But you do wonder. Look, if every single tax filer is going to get 10% more on their refunds, again, a little bit of psychological difference in terms of how much they would be willing to spend of that. Does this actually tell you that inflation could further increase? Because it's not a stimulus check per se, but you know how people treat it as a stimulus check.

AKIKO FUJITA: Always bringing it back to inflation. We had this discussion, by the way, off camera. How many of you actually prepared your taxes alone, or how many of you used an accountant?

BRIAN CHEUNG: We're on different sides here.

AKIKO FUJITA: We're on different sides here because what we hear-- we heard from the IRS that this year, there were slightly more people who used a CPA, who used an accountant. And you have to imagine that's largely because of things like the child tax credit. There are new provisions that a lot of taxpayers had to deal with this year.

BRIAN CHEUNG: It gets more complicated.

AKIKO FUJITA: It gets more complicated. I think time is money. I'm willing to pay an accountant to file my taxes.

BRIAN CHEUNG: I'm not. I just use the software. I probably didn't maximize my deductions, right? But as you mentioned, 46%, so about 46 million Americans, as of April 8, filed by themselves, whereas the other 54%, that's your side of things.

AKIKO FUJITA: I just hand off my paperwork and say--

BRIAN CHEUNG: Hand it off to a CPA, yeah. I will--

AKIKO FUJITA: --I trust you with it.

BRIAN CHEUNG: Maybe if it gets more complicated, I'll do it next year. We'll leave that conversation for another time-- perhaps next April, right? But more on the other side of the break--