No New Stimulus Checks This Year May Mean Smaller Tax Refunds In 2023

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Stimulus checks have helped millions of Americans meet their financial needs over the past two years. The expectation for the coming year is that there will be a lower cash outflow for taxpayers on tax refunds. The IRS recently warned taxpayers that their 2023 tax refunds could be smaller than this year’s payment.

Why tax refunds may be smaller in 2023

In general, tax refunds are available when taxpayers have overpaid their taxes or withheld more than the amount they owe. This year, many taxpayers received substantial refunds because, in addition to the tax refund, they also received the incentive check and the child tax credit.

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However, tax refunds in 2023 may be smaller than in 2022. This is because no federal stimulus checks have been issued in 2022 and most taxpayers have already claimed their federal payments.

“Refunds may be smaller in 2023,” the IRS said in a November press release. “Taxpayers will not receive an additional stimulus payment on a 2023 tax refund because there were no economic impact payments for 2022.”

According to the IRS, the average refund for the 2022 filing season was $3,176 (as of Oct. 28), compared to $2,791 in 2021.

Another reason tax returns may be smaller in 2023 is that it will be more difficult to claim a deduction for charitable donations on the 2022 tax return. After the COVID-19 pandemic, Congress offered charities a tax break for monetary donations in 2020 .

Lawmakers extended the same benefit for 2021 as well. However, the tax break was not extended for 2022. It means taxpayers no longer have benefits for charitable giving if they use the standard deduction.

In 2021, the IRS allowed individuals to deduct $300 per person, or up to $600 per family, in charitable gifts if they did not specify other deductions. This benefit is now no longer available.

Should taxpayers be concerned?

Smaller refunds may concern some taxpayers. A survey by LendingTree found that by 2022, 46% of taxpayers will depend on their refund to make a major purchase, save or invest, or pay off debt.

However, tax experts say people shouldn’t worry about smaller tax refunds in 2023, as they can still take advantage of many other types of tax breaks, credits, and deductions that can help them minimize their taxes and, in turn, get hefty refunds.

Separately, the IRS warned taxpayers not to expect a 2022 tax refund “by a certain date.” Some filings may require “additional review,” and this may slow down the process.

Usually, taxpayers who filed their returns electronically could expect a faster refund through direct deposit. However, if there are problems or errors with the return, the refund may be delayed.

As of November 18, they had received about 3.4 million unprocessed individual returns by 2022, according to the IRS. Of these, 1.7 million need error correction and the rest are paper returns.

The Valley Voice
The Valley Voicehttp://thevalleyvoice.org
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.

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