ON THIS DAY IN HISTORY…
2003: Space Shuttle Columbia disintegrates during reentry into the Earth’s atmosphere, killing all seven astronauts aboard.
While rising prices continue to wreak havoc, many people may be depending on their tax refunds to tide them over. Unfortunately, this year’s refunds may be significantly smaller than expected.
The IRS warned that many Americans will receive a smaller tax refund this year, amid the expiration of several pandemic-era policies.
Last year, the average tax refund was $3,039 — a 7.5% increase from 2021. But now, things are set to trend in the opposite direction as key tax breaks implemented during the COVID-19 pandemic come to an end.
For instance, the child tax credit is no longer available. Eligible parents previously received $3,600 per child, and now that number is back down to $2,000. Similarly, the Child and Dependent Care Credit, which alleviates childcare costs for working parents, drops from a maximum of $8,000 to $2,100.
During the pandemic, even taxpayers who took a standard deduction could also take a $600 deduction for charitable donations. Now, those charitable payments can only be deducted by those who itemize.
For childless taxpayers, the Earned Income Tax Credit is lower this year.
Americans who purchased an electric vehicle in 2022 could qualify for a $7,500 tax credit. But now, there’s a caveat. In order to qualify for the credit, EVs purchased on or after August 16, 2022, must have been assembled in North America.
The IRS is now accepting tax returns
Tax returns are typically due on April 15, but Americans get a few extra days this year, since that date falls on a weekend. Returns are due on April 18. Additionally, those impacted by storms in Alabama, California and Georgia have until May 15 to file.
The IRS said that those who file electronically should expect to receive their refund via direct deposit within three weeks.
Keep in mind, financial experts warn against rushing to file. Make sure you’ve gathered all the relevant forms, and wait for any slow companies to mail out any 1099s or W-2s.