Don’t Be Shocked By Your Tax Refund

Have you been working hard all year and are excited to get your tax refund? Well, bad news, it might not be what you expect. This year tax refunds will be less than previous years, mainly due to support from the early days of the pandemic. Dependent on the situation, taxpayers refund may be hundreds or thousands less than usual. Some individuals may even owe a balance to the government. Last year, the average individual tax refund was $3,176 according to the IRS, and this year it will be less. 

Why will it be less?

1. In 2021, many got a COVID stimulus check that was received as either a check or a credit on their taxes. An individual received $1,400, amounting to $5,600 for a family of 4. This will not be included this year, which will lower returns. 

2. Congress did not approve charitable deductions for taxpayers this past year. The $300 write off for an individual/$600 write off for a married couple will not be available causing a slight increase in tax bills that could reflect a smaller refund.

3. Child and dependent care tax breaks went from an increased amount of $8,000 in 2021 back down to their regular amount of $2,100 in 2022. This means higher tax bills and potential to decrease your tax return.

4. If you are heavily investing pay attention because some mutual funds have sold more shares than usual and gave more money to their investors. This could cause your refund to go down because your tax bill will be higher.

Money has been a struggle with inflation rates increasing. As hard as it may be, do not count on your tax refund to help pay some of your expenses.