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Why your tax refund may be smaller this year

Refunds could be smaller because many pandemic-related tax breaks have expired.

MINNEAPOLIS — The countdown is on to file your taxes. If your taxes are unfinished, you have until Tuesday, Apr. 18 get your taxes filed.

This year, the IRS has a warning: you could see a smaller return this year

Ted Rossman, a senior industry analyst at Bankrate, said the average refund is down about 10% from last year because many pandemic-related tax breaks have expired. There are no more stimulus payments. And the expanded child tax credit, and child and dependent care credit have been reduced.

"It's unfortunate because with inflation running so high, the fact that your refund might be 10% smaller at a time when everything else seems to cost 10% more... that's something that people are worried about," said Rossman.

New numbers show three in four people expecting refunds say this money is important for their finances. Numbers also show that millennials, more than any other generation, count on this money.

Experts say, so far, the average tax refund this year is about $2,900. Last year at this time, it was about $3,200.

So how should you spend your return if it's smaller? 

"Paying off some debt, especially high-cost debt like a credit card, putting some money into savings, maybe you carve out a little bit of fun money while you're at it," said Rossman. "We have to enjoy ourselves, and you don't want to go into total deprivation mode."

If you're a last-minute filer, you can still file for free with the IRS.

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