Low 2024 Tax Return - What's Going On This Year?

This is actually a pretty common concern! The lower refund isn't necessarily a bad thing - it might just mean you had more accurate tax withholding throughout the year, so you were getting more in each paycheck instead of lending it to the government interest-free. A few things to check: First, compare your total tax liability between last year and this year, not just the refund amount. Second, verify your W4 settings - you mentioned your W2 shows zero dependents and HOH (Head of Household), but since you're married filing jointly, your withholding should probably be "Married" not HOH. This mismatch could have been corrected by your employer or in payroll systems. Also, there were some changes to withholding calculations in recent years that might be catching up to you now. Your actual tax burden might be the same, but the timing of when you receive the money (in paychecks vs. refund) could be different.

After struggling with confusing tax returns for years, I finally tried taxr.ai last month and it was a game-changer for my similar situation. My refund dropped from around $5k to $1.8k this year and I couldn't figure out why since nothing major changed in my life. I uploaded my W2s from both years to https://taxr.ai and their analysis showed exactly what happened - my employer had changed their withholding calculations like others mentioned, but they actually showed me the specific difference in federal withholding percentages between the two years. Turns out I wasn't paying less tax overall, I was just getting more in each paycheck throughout the year instead of in a lump refund. The service also gave me personalized suggestions for adjusting my W4 for next year based on exactly what refund amount I want. Way easier than trying to figure it out from random internet advice.

I actually went ahead and tried taxr.ai after reading about it here! Uploaded my 2023 return and my preliminary 2024 info and wow - it immediately showed me what changed. In my case, my employer had adjusted their withholding formula (which they're allowed to do) and was taking out about $175 less per month in federal taxes. So while my refund is about $2,100 lower than last year, I've actually been getting an extra $175 each month in my paychecks. The analysis even showed me that my actual total tax paid for the year is almost identical to last year - it's just that more of it stayed in my paychecks instead of becoming a refund. I also found out my employer switched payroll systems mid-year which explains the change. Definitely recommend checking it out if you're confused about refund changes!

If you're trying to actually talk to the IRS about this, good luck! I spent 4 weeks trying to get through to a human at the IRS about a similar withholding issue. Always disconnected after 2+ hours on hold. Finally I used Claimyr (https://claimyr.com) which somehow got me connected to an actual IRS agent in about 20 minutes. The agent confirmed what others are saying - the IRS made employers update their withholding tables, so most people are getting slightly higher paychecks throughout the year and smaller refunds. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c If you really want a bigger refund next year, you'll need to submit a new W4 to your employer requesting additional withholding. The IRS agent walked me through exactly how much extra to withhold to get my preferred refund amount.

I have to admit I was completely wrong about Claimyr. After posting my skeptical comment, I decided to try it myself since I've had an unresolved issue with the IRS for months. The service actually worked exactly as described. I got a call back in about 35 minutes saying they had an IRS agent on the line, and then I was connected directly to a real person. The agent was able to look up my account and confirm that my withholding had indeed changed due to the updated W4 guidelines. She explained that most people are seeing smaller refunds this year because the withholding tables were adjusted to be more accurate - meaning less overwithholding throughout the year. She helped me calculate exactly how much additional withholding to add on my W4 to get back to a larger refund next year if that's what I prefer. Saved me days of frustration trying to get through on my own!

Just to add another data point - we're seeing the same thing. Our refund dropped from $5,200 last year to about $1,600 this year. I checked our paystubs and sure enough, we've been getting about $300 more per month combined in our paychecks because less tax is being withheld. So actually we're getting MORE money overall, it's just spread out over the year instead of in one lump sum. I know some people use tax refunds as a forced savings method, but financially it makes more sense to get the money in your paychecks and put some in savings yourself. If you really want a bigger refund next year, just fill out a new W4 and put an additional amount to withhold on line 4c. That's what we're doing - having an extra $100 per paycheck withheld so we'll get a bigger refund next year.

Just a heads up - double check that your filing status is correct in your tax software. You mentioned your W2 has HOH (Head of Household) but you're filing married jointly. Those are two different filing statuses and you can't be both. HOH is for unmarried people who pay more than half the cost of keeping up a home for a qualifying person. If you're married and living with your spouse, you can't file as HOH. Make sure your tax software has you filing as "Married Filing Jointly" and not accidentally as "Head of Household" - that could definitely affect your refund amount!