The Amount Of Tax Refund Could Be Less In 2023

Stimulus Check Tax Refund
Stimulus Check Tax Refund

At the start of the 2023 tax filing season, the IRS has issued a warning to taxpayers that they should anticipate receiving reduced refunds as a result of pandemic relief provisions that have been set to expire. One major factor is the absence of government stimulus payments to citizens in 2022 to assist them to cope with the pandemic. In 2021, the final stimulus payments were made.

Those stimulus funds were distributed to millions of people as a recovery rebate credit, which was essentially a tax refund. Through an enhanced child tax credit (CTC), which many progressives viewed as a vital and effective social safety net, millions more people got assistance throughout the pandemic. Congress permitted that credit to expire by the end of 2021.

Several Options For Tax Refund Are Set To Expire This Year

Additionally, a tax refund for charitable deductions was permitted to expire, which may have an impact on more taxpayers. According to an IRS representative who spoke to The Hill, individual tax situations might differ, so not all refunds for the tax year 2022 would be smaller than in past years. The end of the enlarged CTC will bring about one of the biggest adjustments in tax liability. The CTC for families earning up to $150,000 annually was boosted under the Biden administration’s American Rescue Plan from $2,000 to $3,000 for children over the age of 6, and from $2,000 to $3,600 for children under the age of 6. Additionally, it increased the eligibility age for the credit from 16 to 17.

The coronavirus pandemic, according to the CTC’s detractors, made it necessary for temporary relief measures such as a tax refund because it was too expensive to maintain permanently. According to a calculation by the Tax Foundation, a Washington-based think tank, making the enlarged child tax credit permanent would cost around $1.6 trillion over the next 10 years of the legislative budget window.