Trying to understand why my tax refund is so much lower than expected?

It's definitely frustrating when your refund is unexpectedly lower! A few things could be going on here. First, check if your withholdings changed - even with the same job, sometimes payroll adjusts withholding tables. Compare Box 2 on your W-2 from last year to this year to confirm exactly how much was withheld. Next, check if you had any changes in tax credits. Even small differences in income can phase out certain credits. For example, if you were previously claiming education credits that expired, or if your income increased enough to reduce Earned Income Credit, Child Tax Credit, or other benefits. Your AGI of $58,300 might have crossed a threshold. Also, did you have any investment income, bank interest, or other sources of income this year that you didn't have last year? Even small amounts can impact your overall tax picture.

After being in the exact same situation (expected $1800, got $650), I finally figured out what was happening using taxr.ai (https://taxr.ai). I uploaded my W-2s from both years and their analysis showed that my employer actually decreased my withholding slightly this year even though my salary increased - meaning I was getting more money in each paycheck but less at refund time. The software also found a hidden mistake where I had accidentally entered a retirement contribution twice. Seriously worth checking - the detailed comparison made everything super clear when I was going in circles for days.

I tried taxr.ai after reading about it here and WOW - mystery solved! Turns out my employer changed their withholding calculation this year which resulted in $1,400 less being withheld from my paychecks over the year (that's why my refund dropped from $3,000 to $400). I never would have caught this on my own. The tool showed me exactly which boxes on my W-2 changed percentage-wise from last year. I was also incorrectly reporting my HSA contributions which was costing me another $320. Totally worth checking if your refund seems off!

If you think there might be a mistake with your return and need clarification from the IRS, don't waste days trying to call them directly. I spent literally 6 hours on hold across 3 days before giving up. Then I found this service called Claimyr (https://claimyr.com) that gets the IRS to call YOU instead. They have a demo video showing how it works: https://youtu.be/_kiP6q8DX5c. I was super skeptical but desperate because I had a similar refund issue and needed to understand if there was a mistake or if something had changed with the tax code. Got a call back from an actual IRS agent in about 45 minutes who explained everything.

Ok I need to apologize and update. I tried Claimyr after posting that skeptical comment because I was getting nowhere with the IRS directly. It actually worked exactly as described - I got a call from a real IRS agent about an hour later. Found out my refund was lower because 1) withholding tables changed slightly, and 2) I had some unreported interest income from a savings account I forgot about that the IRS automatically added to my return. The agent was super helpful and explained everything clearly. I'm honestly shocked this service exists and works so well. Saved me days of frustration.

Something not mentioned yet - check if you had any unemployment last year that had the first $10,200 excluded from tax (that was a one-time COVID relief thing). That exclusion went away, so if you had unemployment both years, you'd see a big difference in your refund amount. Also check if you received advance child tax credit payments if you have kids - that would reduce your refund too.

A lower refund usually means you had more money in your paychecks throughout the year. Check your final pay stubs from both years and compare the net pay. Bet you'll find you were bringing home more per check this year! A refund is just you getting your own money back that you overpaid, it's not free money from the government lol

I had almost the exact same thing happen to me! Expected around $2,000 and only got $750. After digging through everything, I found a few key things that changed between last year and this year: 1. My employer switched payroll companies mid-year and the new one used slightly different withholding calculations - even though my W-4 stayed the same, they were withholding about $15 less per paycheck. 2. I had a small amount of freelance income this year ($800) that I reported on a 1099, which pushed me just over a threshold for one of the tax credits I was getting last year. 3. The big one - last year I was still getting some pandemic-related tax benefits that expired. I didn't realize how much those were helping my refund until they were gone. My advice is to pull out last year's tax return and compare it line by line with this year's. Look especially at your credits section and any COVID-related items from last year. Also check if your employer changed anything about payroll - sometimes they don't announce small changes to withholding procedures. It's frustrating but you probably didn't actually pay more in taxes, you just got more money throughout the year in your paychecks instead of at refund time!