The IRS predicts that over 165 million individual federal income tax returns will be filed in 2022. According to a new NerdWallet study, while most Americans intend to file, many need to understand how inflation affects tax brackets. It was also discovered that most Americans plan to take some action to reduce their tax obligations through Green Tax Credits.
The Harris Poll polled over 2,000 U.S. adults ages 18 and older online between December 6 and 8, 2022. It also discovered that Americans have a generally favorable view of so-called “green tax credits,” which reward taxpayers for purchasing energy-efficient products.
READ ALSO: Water Heater Hacks: Save Up to $400 On Your Energy Bill
Forecasts for Tax Refunds and Bills
Approximately 9 out of 10 Americans (86%) intend to file a federal tax return for the 2022 tax year. Just over half (55%) of those who filed expect to receive a federal refund. On the other hand, 21% of filers anticipate owing money to the IRS.
The average refund for those who expect to get money back is $2,205. This matches historical expectations but is lower than actual historical averages.
According to the IRS, nearly 9 out of 10 returns (87%) for the 2020 tax year used the standard deduction.
The standard deduction for joint filers increased to $25,900 in 2022, up from $25,100 in 2021. The deduction for single filers and those filing separately is $12,950 in 2022, up from $12,550 in 2021.
Inflation Adjustments and Tax Brackets
While inflation has been prominent in the daily news cycle, not all Americans know its tax implications. Although a YouGov poll conducted in November 2022 found that 66% of Americans believe inflation and prices are significant issues to them, our survey found that roughly a quarter (28%) of Americans believe income tax brackets are not commonly adjusted for inflation.
Americans’ Perspectives on Green Tax Credits
American taxpayers can claim a tax credit for installing certain energy-efficient systems in their homes or purchasing electric vehicles (EVs). These Green Tax Credits apply to items such as solar panels and plug-in vehicles manufactured in the United States.
READ ALSO: Financial Assistance to Pay Overdue Utility Bills: Are You Qualified?