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If your federal refund is lower than expected, it's because you didn't have enough federal income taxes withheld from your paychecks. Do a line by line review of your 2020 Form 1040 versus your 2019 Form 1040 to identify the difference or differences. See Preview your 2020 1040. Also, see the information below.
If you didn't update your form W-4 for 2020 or 2019, it’s highly possible this is why you owe. If you'd like to get a bigger refund, complete a form W-4 for 2021 and have an additional withheld. You'll get less money in your paycheck but you'll get a bigger refund next year.
We've got some other possible reasons for a year-over-year refund decrease:
Source: TurboTax FAQ
Need to talk to someone about why am I getting so little back
A common occurrence in 2020 has been unemployment income. Many people who received unemployment either only had federal withholding applied to their payments or had no withholding at all. And since unemployment is taxable income at both the federal and state level, if the amount you received was large, it will cause you to owe income tax (or reduce your refund), either to the federal government, the state government or both.
We can't see your tax returns here in the Community. You can add TurboTax Live to get access to tax experts who can view your tax return and provide you with specific answers to these types of questions for you. @Shakara
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