Ronda Lee of Yahoo Finance explained the latest changes, tax credits, and filing returns for the 2023 tax season.
Lee said the 2023 tax season has lower tax refunds versus last year. The latest weekly data from the Internal Revenue Service showed a decrease of 11% in the average refund.
Rus Gurafalo, founder and president of Brass Taxes, said tax refunds could be smaller this year since most of the pandemic-era tax benefits have expired, particularly the COVID federal and state stimulus money.
Also Read: 2023 Tax Season Guide: How to Get Better Tax Refund This Year
Low-income families might receive a smaller tax refund this year as most federal-funded programs revert to pre-COVID levels. (Photo: BDB Law)
Lesser Tax Refund
Most federal-funded programs have reverted to pre-COVID levels, which were temporarily increased with the American Rescue Act last year.
The Child Tax Credit went back from $3,600 last year to $2,000 per child dependent this year. This tax credit is also no longer fully refundable.
The Earned Income Tax Credit (EITC) has been reduced from $1,502 last year to $500 this tax season.
The Child and Dependent Care Credit have also been reduced from $8,000 last year to $1,200 this year.
Find Out: $2,000 Per Child in Child Tax Credit 2023
The decreased amount of these programs will greatly affect the lowest-income families.
In November, the IRS said that the tax refund for the 2023 tax season might be smaller than the previous fiscal years. CNBC reported taxpayers would not receive an additional stimulus payment since there were no economic impact payments for 2022.
Furthermore, the tax incentives enacted in 2020 for charities are not extended on the 2022 return. It means taxpayers will no longer claim benefits for charitable gifts.
Read More: 2023 Tax Season: Tips to Pay Lower Percentage in Taxes
