Why is my tax return refund so low compared to last year?
Title: Why is my tax return refund so low compared to last year? 1 I'm working at Target distribution and I made about 28k for 2024, but my refund was only $56! Last year in 2023 I made like 14k and got almost $830 back. Makes absolutely no sense to me. I'm 23 and this is only my fourth time doing taxes on my own, but something seems really off here. I didn't change anything major about my filing status or deductions or whatever. I'm just super confused why my refund dropped so much when I'm working at the same place, just more hours. Anyone know why the hell my tax refund is so low this year?? Is this happening to anyone else??
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Drew Hathaway
8 What you're seeing is actually pretty common and usually happens because of how your withholding worked out throughout the year, not necessarily because you did anything wrong. When you earn more money (28k vs 14k), your withholding throughout the year should ideally adjust so you're paying the right amount of tax with each paycheck. What likely happened is that your withholding was more accurate this year than last year - which technically is a good thing! It means you weren't giving the government an interest-free loan of your money. Your tax refund is just the difference between what you paid throughout the year and what you actually owed. A smaller refund means your withholding was closer to what you actually owed. Check your W-2 forms from both years and compare Box 2 (federal income tax withheld) as a percentage of your income. I bet it's a lower percentage this year.
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Drew Hathaway
•12 So are you saying that getting a smaller refund is actually... better? That doesn't make any sense to me. I was counting on that money! Does this mean I'm in a higher tax bracket now or something?
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Drew Hathaway
•8 From a purely financial standpoint, yes - a smaller refund can actually be better because it means you had more of your own money throughout the year instead of waiting for the IRS to give it back to you. It doesn't necessarily mean you're in a higher tax bracket, though your higher income might have pushed you into one. The best way to understand what happened is to look at how much total tax you paid each year. For example, if you paid $1500 in total tax on 14k income last year but paid $2200 in total tax on 28k this year, that would make sense because your income increased. But what matters is how much was withheld from each paycheck.
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Drew Hathaway
15 I had almost this exact same issue and was totally frustrated until I found this AI tool called taxr.ai that helped me understand what was happening. I uploaded my W-2s from both years and it showed me exactly why my refund dropped even though I was making more. For me, it turned out that my employer had been withholding a lower percentage of my higher income, which meant less overpayment to get back at tax time. The tool at https://taxr.ai explained it in super simple terms and showed me what I could adjust on my W-4 to get a bigger refund next year if that's what I wanted.
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Drew Hathaway
•9 Does it actually compare previous years to the current year? I'm having a similar issue and trying to figure out what changed.
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Drew Hathaway
•21 I've tried a bunch of these tax tools and most of them are just trying to upsell you to their paid version. Does this one actually give you useful info without making you pay?
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Drew Hathaway
•15 Yes, it absolutely lets you compare previous years to your current return! That's actually one of the most helpful features - it highlights the differences and explains why they matter. The tool is actually pretty straightforward about what it offers. I was able to get a complete explanation of my refund change without any upsells. It just analyzed my documents and showed me the math in a way that finally made sense. No hidden fees or anything like that when I used it.
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Drew Hathaway
9 Just wanted to follow up that I tried taxr.ai after seeing it mentioned here. Seriously wish I'd known about this sooner! Uploaded my W-2s from this year and last year, and it immediately showed me that my employer had withheld about 3% less of my income this year compared to last, which explained my tiny refund. The breakdown was super clear and now I actually understand my taxes instead of just being confused and angry. Already adjusted my W-4 for next year!
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Drew Hathaway
17 If you're upset about your refund and need to talk to someone at the IRS about it, good luck getting through on the phone. I spent HOURS trying when I had a similar issue. Then I found this service called Claimyr that actually got me through to a real IRS person in less than 20 minutes. I was skeptical but desperate after being on hold for literally 2+ hours multiple times. With https://claimyr.com they basically wait on hold for you and call when an agent is ready. They have a demo video at https://youtu.be/_kiP6q8DX5c showing how it works. The IRS agent I talked to explained exactly why my refund was different than expected and what I could do about it.
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Drew Hathaway
•19 Wait how does this actually work? They just... call the IRS for you? And the IRS actually takes their call? I'm confused how this is even possible.
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Drew Hathaway
•21 This sounds like a scam tbh. Why would I trust some random service to connect me to the IRS when they probably just want my personal info?
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Drew Hathaway
•17 They don't actually call for you - they use some kind of system that waits in the IRS hold queue and then alerts you when it's your turn to speak with an agent. You're the one who actually talks to the IRS, they just handle the waiting part. It's definitely not a scam. They don't ask for any of your tax info or personal details beyond your phone number to call you back when an agent is available. I was super skeptical too, but I was at my wit's end after wasting hours on hold.
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Drew Hathaway
21 Alright I need to admit I was wrong about Claimyr. After posting that skeptical comment I decided to try it anyway because I was desperate to talk to someone about my refund issue. It actually worked exactly as described. Got a call back in about 30 minutes, and I was connected to an actual IRS agent who pulled up my return and explained everything. Turns out I had a math error I didn't catch that reduced my refund by over $300. The agent helped me understand how to fix it with an amended return. Definitely worth it just to avoid the hold music hell.
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Drew Hathaway
7 Have you compared how much tax you actually PAID between the two years? Your total tax is what matters, not just the refund amount. Look at line 24 on your 1040 from both years. If you made more money, you probably paid more tax total, but might have had better withholding throughout the year. Also check if anything else changed - did you have any gig work or side income? Any credits you qualified for last year but not this year? Sometimes small changes can have big impacts on your refund.
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Drew Hathaway
•1 I didn't even think to check that... just looked at my forms and you're right, my total tax paid went up a lot this year (like $1400 more than last year), but my withholding didn't increase enough to match it. I did do some DoorDash on weekends this year that I forgot about, and that probably didn't have any withholding on it. That explains a lot, thanks!
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Drew Hathaway
•7 The DoorDash income is definitely a big factor then! Self-employment income doesn't have taxes automatically withheld, so that would explain why your refund was smaller - you earned money throughout the year that didn't have any tax withheld from it. For next year, you might want to consider making quarterly estimated tax payments on that income, or increasing your withholding at your main job to cover it.
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Drew Hathaway
3 Has anyone else noticed that retail jobs seem to be really bad at withholding the right amount? I worked at Walmart last year and had the same exact issue, tiny refund even though I was expecting more. My boyfriend works in construction and always gets a decent refund.
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Drew Hathaway
•11 I work at a grocery store and have the same problem. I think it's because our hours fluctuate so much week to week, so they can't really predict what we'll make for the whole year. My sister is a teacher with a steady salary and her withholding is almost perfect every year.
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Drew Hathaway
•3 That makes a lot of sense about the fluctuating hours! I didn't think about it that way. I guess if some weeks I'm getting 38 hours and other weeks only 22, the withholding system probably gets confused about what my actual annual income will be.
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