Millions of Americans have received stimulus payments over the past two years to help them fulfill their financial responsibilities. Fewer tax refunds will be given to taxpayers in the future year, according to predictions. The IRS has warned people that the number of their tax refunds in 2023 may be lower than what they were this year.
Reasons Why Tax Refunds Might Be Lower in 2023 Lack of Stimulus Checks
People who overpaid their taxes or kept more money than they should have generally qualify for tax refunds. Many taxpayers received sizeable refunds this year since they also received the stimulus check and the child tax credit.
However, tax refunds in 2023 might be lower than in 2022. This is because most taxpayers have already received their federal benefits and no government stimulus checks were issued in 2022. The IRS issued a press release in November stating that refunds “may be less in 2023.” “Taxpayers will not receive an additional stimulus payment with a 2023 tax refund because there were no economic impact payments for 2022.”
According to the IRS, the average Stimulus Check refund for the 2022 filing season was $3,176, up from $2,791 in 2021. Additionally, because it will be harder to deduct charitable contributions on the 2022 return, tax refunds in 2023 might be less generous.
Congress gave organizations a tax exemption for cash gifts in 2020 as a response to the COVID-19 epidemic. The same benefit was also made available by lawmakers for 2021. But the tax break wasn’t available until 2022. It suggests that taxpayers are no longer qualified for benefits for charitable contributions if they claim the standard deduction.
The IRS allowed taxpayers to deduct $300 per person or up to $600 per family for charitable contributions in 2021 even if they did not itemize other deductions. This advantage is no longer available.
