Americans Might Be In For A Tax 'Refund Shock' Next Year: Analyst

Tyler Durden's Photo
by Tyler Durden
Sunday, Dec 11, 2022 - 01:30 AM

Authored by Jack Phillips via The Epoch Times (emphasis ours),

Millions of Americans could face a “refund shock” when they file their taxes next year because a number of pandemic-related programs are set to expire or have expired, said an analyst.

Blank Social Security checks are run through a printer at the U.S. Treasury printing facility in Philadelphia, Pennsylvania, on Feb. 11, 2005. (William Thomas Cain/Getty Images)

Data from the Internal Revenue Service (IRS) shows that the average refund taxpayers got back for their 2021 taxes was about $3,200, or some around 14 percent higher than the previous year. The next refunds will average about $2,700, said Mark Steber, chief tax information officer at Jackson Hewitt.

The 2021 tax year “was quite a remarkable year with the insertion of all those new tax breaks,” Steber told CBS News this week. “But jump ahead to this year, and a lot of the increases expired, hence the term ‘refund shock’ or ‘refund surprise.'”

Due to the expiration of some programs, “You’re probably going to have not as pleasant an experience as you had last year,” he noted. “There were larger, enhanced tax credits available last year that aren’t available this year,” Steber also remarked.

For example, the child tax credit is one benefit that will shrink when parents file their 2022 taxes. Normally, parents get about $2,000 for each of their children, but in 2021, the benefit increased to $3,600 for every child under 6 and $3,000 for minor children aged 6 and older.

Also, the Child and Dependent Care Credit that parents can use to pay for child care was boosted under the Biden administration-backed American Rescue Plan. That raised the credit up to $8,000 per family in 2021, or more than in previous years.

The IRS has already issued notices about potentially smaller tax refunds, noting in November that “taxpayers will not receive an additional stimulus payment with a 2023 tax refund because there were no economic impact payments for 2022.”

Additionally, the agency said, it will be more difficult to claim a deduction for charitable on a 2022 tax return.

“The IRS cautions taxpayers not to rely on receiving a 2022 federal tax refund by a certain date, especially when making major purchases or paying bills,” the agency said last month. “Some returns may require additional review and may take longer.”

Online Services

The agency this week again wrote that Americans who made more than $600 online selling goods and services will have that income reported to the IRS

People who made money via eBay, Etsy, Poshmark, Uber, and other digital services will face the new scrutiny and rules. It applies to anyone who made more than $600 via those platforms or via Venmo, Cash App, Zelle, PayPal, or similar platforms in return for goods and services.

Read more here...