This 2023 will be hard for Americans to identify how big or small a tax refund might be.
This 2023 will be hard for Americans to identify estimating how big or small a tax refund might be.
How Big Or Small Will Your Tax Refund Be?
Pandemic-era tax breaks are gone, and several taxpayers might receive smaller refunds, especially lower-income families. In last year’s Inflation Reduction Act may mean larger ones for a handful.
The size of tax refund is important for Americans because it’s often the biggest windfall of the year that they set apart for savings, vacations, owe payments, or even essential needs.
The American Rescue Plan Benefits Expired
The average givebacks last year was $3,176 as of October 28, according to the latest data available from the IRS, up nearly 13 percent from $2,815 at the end of 2021. The growth was largely due to enhanced credits presented by the American Rescue Act which has now come to an end. Moreover, the Child Tax Credit (CTC), Earned Income Tax Credit (EITC), and the Child and Dependent Care Credit have resumed to pre-COVID levels.
The improved CTC credit was halted, and taxpayers receive $2,000 per child dependent compared with last tax season’s $3,600. Also compared to last year, it’s not refundable, meaning taxpayers won’t receive the full credit if it’s larger than their tax dept. Others who still qualify for the CTC may see a larger refund this year, even though the credit is worth smaller. That’s because the advanced payments for the CTC have also vanished. Last year, the EITC income threshold was also increased for single filers with no children, receiving as much as $1,502 for the credit. However, it extended for this year so the eligible individual filers with no children can only qualify for a maximum of $500.
Lastly, the Child and Dependent Care Credit which covers out-of-pocket expenses for child care and day camps also climbed back for this year. Last year, the credit was worth $8,000 for one dependent but for this tax season this year, worth $2,100 only.
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