Taxpayers may need to prepare for smaller tax refunds in 2023. According to the Internal Revenue Service, refunds could be smaller because taxpayers didn’t receive stimulus payments this tax year.
As explained by CNBC, your refund is based on taxable income calculated by subtracting itemized deductions from your gross income. The IRS is also warning taxpayers not to rely on receiving their tax refunds by a certain date, “especially when making major purchases or paying bills.”
If you want your refund faster, you should electronically file an error-free return and request your payment via direct deposit, the IRS says.
There will be some major changes to tax deductions and credits for tax year 2022 (to be filed in spring 2023) as many expanded benefits of the American Rescue Plan go away. TurboTax is reminding filers to know which credits will be reverted or retired for filing, including changes to the Child Tax Credit and Earned Income Tax Credit.
Standard deductions for your 2022 and 2023 taxes will be higher after the Internal Revenue Service raised them to account for inflation. That means the dollar amount taxpayers can hang on to will increase for many.
For further information on 2022 filing year credits and deductions, visit the Internal Revenue Service. The deadline to file 2022 taxes will be Tuesday, April 18, 2023.