The IRS Says You’ll Probably Get a Smaller Tax Refund This Year – Here’s Why

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Tax refunds are a big silver lining of enduring winter — but, if you’re expecting a big check in 2023, be prepared to see less than previous years.

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Experts and even the IRS are warning that tax refund “sticker shock” will happen early next year for 2022 returns because some of the pandemic benefits that padded refund checks expired in the 2021 filing season. That includes the expanded child tax credit, child and dependent care credit and federal stimulus payments.

Adding to the bad news: “If you tend to owe come tax season, you might owe a little bit more in 2023 because you won’t be eligible for as many credits,” NextAdvisor’s Alex Gailey wrote.

“A lot of things going on during COVID have been brought back down for the most part to 2019 levels,” said CPA Krystal Todd, per NextAdvisor.

Here are some of the most pressing issues to consider this tax season, according to CNBC:

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However, the Internal Revenue Service did indicate some good news regarding deductions: married couples filing jointly will be allowed a standard deduction of $27,700 — up $1,800. And for single taxpayers and spouses filing separately, the standard deduction is $13,850, up $900. For heads of households, that figure is now $20,800, up $1,400.

This is all to say that preparing early is more important than ever in advance of 2023’s tax season. Start gathering all relevant paperwork, receipts, and documentation for all deductions or itemizations now. Use the IRS calculator to estimate your taxes due or amount to be returned, planning for any payments if need be.

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Finally, if this seems an extremely daunting task — or simply more trouble than it’s worth — lining up a tax professional who can reduce any potential headaches is strongly advised.

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