Federal Tax Refunds May Be Smaller This Year
The official tax filing season is under way and your refund check may be smaller this year. The last time you filed your federal tax returns, Congress expanded several tax credits to help folks through the Covid pandemic. But this year when you prepare your taxes you will find some of those credits have gone away. for the 2022 tax year.
The IRS says, "Some tax credits return to 2019 levels. This means affected taxpayers will likely receive a significantly smaller retund compared with the previous tax year. Changes include amounts for the Child Tax Credit (CTC), Earned Income Tax Credit (EITC) and Child and Dependent Care Credit. Those folks who got $3,600 per dependent in 2021 for the CTC will, if eligible, get $2,000 for the 2022 tax year. For the EITC, taxpayers with no children who receive roughly $1,500 in 2021 will now get $500 in 2022. The Child and Dependent Care Credit returns to a max of $2,100 in 2022 instead of $8,000 in 2021."
As a result of all of this the average tax refund in 2022 for the 2021 tax year was almost $3,200, a 14% increase from the previous year, according to IRS data. The typical tax refund this year will be closer to $2,700. The IRS is warning people who are looking forward to a refund not to make major purchases by a certain date because the agency anticipates that some returns may undergo reviews that take time.
This year, people will have three extra days to file their tax forms, April 18th is the 2023 tax deadline. By law, Washington DC holidays impact tax deadlines for everyone in the same way as federal holidays. The due date is April 18th rather than April 15th because of the weekend and the Washington DC Emancipation Day holiday which will be Monday, April 17.