IRS has warned that the expiry of numerous pandemic benefits that legislators had created to aid Americans in the crisis might surprise millions of American taxpayers when they saw their tax returns in 2023.
Families may thus receive reduced returns when filing their taxes for the fiscal year 2022. Data from IRS showed that the average tax refund in 2022 (for the 2021 tax year) was close to $3,200, an increase of 14 percent over the previous year.
The filing date is April 18, but the IRS said on Thursday that it would begin taking tax returns on January 23. This will give taxpayers three more days to submit by the regular April 15 deadline since it falls on a Saturday, and Emancipation Day in the District of Columbia is on Monday, April 17.
Americans expect tax refund shock
In a November news release, IRS said taxpayers would not get an extra stimulus payment with a 2023 tax refund because there were no economic impact payments for 2022.
Mark Steber of Jackson Hewitt told WCPO that refunds would appear far more “normalized” than last year.
Steber added that Americans should be ready for more refund volatility or some refund shock in a practical setting.
But this year, Steber said refund levels are more likely to resemble returns from 2019 or 2020.
The primary cause is the absence of government stimulus payments from Congress in 2022, which many individuals received during tax season. Additionally, Congress increased the Child Tax Credit in 2021, which has expired, to help families.
It’s not all doom and gloom, with many more tax advantages to take advantage of, Steber noted.
What to do about a smaller refund
The College Investor’s founder and personal financial guru Robert Farrington advised Americans to see their tax bill as a report card.
“The school year ended on December 31. Now you’re waiting for the results,” Farrington said in a CNBC report.
Americans can still earn some additional figurative credit by reducing taxable income. They have until Tax Day to make contributions that can be deducted from their 2022 income, for example, if they have a health savings account. Single payers-might contribute up to $3,650 in 2022, while families could contribute up to $7,300.
Traditional IRA account holders can take a similar action. They can deposit up to $6,000 in one of these pre-tax retirement accounts for 2022.