The Internal Revenue Service (IRS) announced Mon., Jan. 23 as the beginning of the nation’s 2023 tax season when the agency will begin accepting and processing 2022 tax year returns.
“Be prepared for lower tax refunds not because taxes have increased but because several COVID-era programs have expired and weren’t renewed by Congress,” said Raulerson Castillo & Company Certified Public Accountant (CPA) Irene Castillo.
The reasons tax refunds may be smaller this year include:
No recovery rebate credits for 2022.
The expanded child tax credits have expired. For 2021 returns, the child tax credit offered up to $3,600 per child under age six and up to $3,000 per child ages six through 17 with half available via upfront payments. For 2022, the tax break reverts to the previous amount- up to $2,000 per child under the age of 17.
The expanded child care credits have expired. For 2021 returns, the credit jumped to up to $8,000 for one qualifying person or $16,000 for two or more dependents. However, for 2022, those caps returned to $3,000 and $6,000, respectively.
The expanded charity deduction expired. For 2021 returns, single donors could claim a deduction of up to $300 for cash donations. Married couples filing jointly could claim a deduction of up to $600 for cash donation. This tax break wasn’t extended for 2022.
The Earned Income Credit and Additional Child Tax Credit “lookback” rule has expired, which allowed taxpayers to use 2019 earned income information to determine eligibility for the credits.
Even though the IRS will begin accepting returns on Jan. 23, employers have until Jan. 31 to issue workers their W-2s and 1099s. “Wait for your issued W-2 document because using your paystub can lead to errors and refund delays,” said Castillo. Even the IRS urges people to have all the information they need before they file a tax return to avoid the possibility of needing to file an amended tax return.
More than 168 million individual tax returns are expected to be filed, with the vast majority of those coming before the April 18 tax deadline. With the three previous tax seasons dramatically impacted by the pandemic, the IRS has taken additional steps for 2023 to improve service for taxpayers by hiring more than 5,000 new telephone assisters and added more in-person staff to support taxpayers. “With these new additional resources, taxpayers and tax professionals will see improvements in many areas of the agency this year,” said Acting IRS Commissioner Doug O’Donnell.
The IRS has a variety of free services available to assist taxpayers, including it’s Volunteer Income Tax Assistance and Tax Counseling for the Elderly programs, that offer free basic tax return preparation to qualified individuals. Taxpayers can also get help from trusted tax professionals, commercially available tax software as well as IRS Free File, which provides free electronic filing of tax returns.
For more information visit www.irs.gov.