Be Prepared for a Smaller Refund
Many taxpayers enjoyed robust tax refunds the last two years, thanks to several measures rolled out during the pandemic.
However, the IRS is warning taxpayers that refunds may be smaller in 2023 as tax credits return to 2019 levels.
These changes will especially affect people who claim the Child Tax Credit, Earned Income Tax Credit and the Child and Dependent Care Credit.
- Filers who received $3,600 per dependent in tax year 2021 for the Child Tax Credit will, if still eligible, receive $2,000 for the 2022 tax year.
- For the Earned Income Tax Credit, eligible taxpayers with no children who received roughly $1,500 in tax year 2021 will now get $500.
- The Child and Dependent Care Credit returns to a maximum of $2,100 instead of $8,000 in tax year 2021.
Another pandemic-era exception is also going away: Above-the-line charitable donations.
During COVID, taxpayers could take up to a $600 charitable donation tax deduction on their returns -- even if they didn't itemize.
That's going away. If you're like most Americans and take the standard deduction, donating to nonprofits won't boost your refund or lower your tax bill like it did the last two years.
On Jan 23, the IRS will start accepting and processing 2022 tax returns.
April 18 is Tax Day, when either the returns are filed or taxpayers can request an extension and pay the tax owed. It is not the traditional April 15 due to the April 17 Emancipation Day holiday in Washington, D.C.
If a filing extension is requested, then taxpayers have until Oct. 16 to send in their paperwork.
As for refunds, electronic refunds will be issued about 21 days after filing, but if a taxpayer has the earned income tax credit or additional child tax credit as part of their filing, those payments will start on Feb. 28, the IRS said.
If you need help, the IRS is available to answer your questions for free. Several online tools are available at IRS.gov.