(DailyVantage.com) – Tax season is right around the corner, and many people are looking to cash in on their refunds. However, this year, a number of factors are likely to contribute to smaller returns than in the past few years. The IRS is warning Americans who claim dependents and make charitable gift contributions that the deduction amounts have decreased to avoid shock when they file.
The most notable slash will come to those filing dependent and child tax credits, and families will likely feel the hit the hardest.
The IRS has warned that tax refunds may get smaller in 2023.
This is what you can do to ensure you get the biggest tax refund you possibly can. pic.twitter.com/RsKakFJ0MR
— USA TODAY (@USATODAY) December 5, 2022
In 2021, the Earned Income Tax Credit was $1,500 for individuals who didn’t have dependents. This amount will be just $500 in 2022. Additionally, the Child and Dependent Care Credit, raised to a maximum of $8,000 in 2021, is dropping to its pre-pandemic levels of $2,100. Finally, the IRS has reduced the Child Tax Credit to $2,000 from $3,600.
Another reason for smaller returns, according to the IRS, is the lack of Economic Impact Payments in 2022. In 2021, the agency included the stimulus payments as part of the tax refund.
People who make charitable donations also need to be aware of changes. Filers would need to forego the standard deduction and itemize these gifts as deductions instead.
The tax deadline for 2023 is April 18. Will these changes affect you?
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