Despite the wide-ranging staffing and budgeting issues at the Internal Revenue Service (IRS), the agency has valiantly sent out more than 63 million tax refunds worth over $204 billion in total, according to its latest release. The average tax refund comes in at $3,226, which is more than 11 percent higher than last year’s amount of $2,893.

It is true that most taxpayers who have filed have gotten a share of that refund amount, but there are still plenty of individuals who didn’t receive a dime and even ended up owing the IRS some of their hard-earned cash.  

Collecting More Money Upfront

According to personal finance expert Maurie Backman at The Motley Fool, there are certain reasons why this is the case. On top of that list is if a taxpayer collects higher paychecks upfront.

“Your employer uses information you provide on your W-4 tax withholding form to determine how much tax to take out of your paycheck each pay period,” she writes. “If you claim more allowances, you'll have less tax withheld. That means your paychecks may be larger, but it also means you may not be due a refund when you file your tax return.”

Another situation deals with a second job or side hustle in which those wages aren’t taxed at all. “When you work on a self-employed basis, your employer doesn't withhold tax from your earnings the same way it would happen when you're a salaried employee,” Backman explains. “If you hold down a side hustle on a self-employed or freelance basis, you may owe taxes on that income when you file your return—which explains why you don't see a refund coming your way.”

In addition, for those who make a lot of money via investments in their brokerage accounts, it could sometimes be a rude awakening come tax season time. That’s because for every investment one sells for a gain, they are on the hook for taxes on them.

Focus on Credits and Deductions

Finally, a taxpayer could be shut out of any refunds due to the fact that they don’t claim the right credits or deductions.

“There are a host of tax breaks available to filers in the form of both deductions and credits. A deduction exempts a portion of your earnings from taxes, and common deductions include mortgage interest, state and local taxes, and medical expenses provided they exceed a high enough portion of your income,” Backman notes.

“A tax credit, meanwhile, is a dollar-for-dollar reduction of your tax liability. Common credits include the Child Tax Credit and the Earned Income Tax Credit. If you don't claim the credits and deductions you're entitled to, you could lose out on a tax refund, so it's important to know what tax breaks you're eligible for,” she concludes.

Ethen Kim Lieser is a Washington state-based Finance and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.

Image: Reuters.