{"id":2428,"date":"2023-01-30T08:00:48","date_gmt":"2023-01-30T08:00:48","guid":{"rendered":"https:\/\/acmmconsulting.com\/?p=2428"},"modified":"2025-06-02T15:44:24","modified_gmt":"2025-06-02T15:44:24","slug":"your-tax-refund-may-be-smaller-this-year-heres-why","status":"publish","type":"post","link":"https:\/\/acmmconsulting.com\/en\/your-tax-refund-may-be-smaller-this-year-heres-why\/","title":{"rendered":"Your tax refund may be smaller this year. Here\u2019s why"},"content":{"rendered":"<p>Official tax-filing season kicks off Monday, January 23, and it may hold some surprises for your wallet.<\/p>\n<p>So, whether you expect to file your 2022 federal income tax return right away or wait until the last minute, now is a good time to get a sense of whether you\u2019ll owe more money to the IRS, or whether you\u2019ll likely get a refund and if so, how much.<\/p>\n<p>Here\u2019s why: The amounts might be very different than they were last year. Several popular tax breaks have changed since you filed your 2021 return. And your financial circumstance may have altered too, if you sold any assets or were laid off.<\/p>\n<p>If it turns out you will owe additional money to the IRS, and need some time to get the funds together, \u201cYou still can file but set your payment to go on April 18,\u201d said Kathy Pickering, chief tax officer at H&amp;R Block. (If you pay later than April 18, you may be subject to penalties and interest.)<\/p>\n<h2>Why some may get a smaller refund<\/h2>\n<p>Most Americans get a federal tax refund every year, and for many that refund is a big boon to their finances.<\/p>\n<p>But that boon may be smaller this year, in part due to the expiration of some tax-break enhancements that were in effect the previous tax year.<\/p>\n<p>Child tax credit: For tax year 2022, parents may claim a maximum child tax credit of $2,000 for each child through age 16 if your modified adjusted gross income is below $200,000 ($400,000 if filing jointly). Above those levels, the credit starts to phase out. And the portion of the credit treated as refundable \u2014 meaning it is paid to you even if you don\u2019t owe any federal income tax \u2014 is capped at $1,500, and that is only available to those with earned income of at least $2,500.<\/p>\n<p>But that\u2019s well below the now-expired enhanced child tax credit that was in effect for 2021. Among other things, it was fully refundable with no earned income requirements, Pickering noted. And the enhancements let parents claim a maximum credit of $3,600 for every child under age 6 and up to $3,000 for children ages 6 through 17.<\/p>\n<p><strong>Child and dependent care credit<\/strong>: The tax credit that working parents use to help pay for child care or that filers claim to pay for the care of an adult dependent is also notably lower for tax year 2022. That\u2019s because Congress let the 2021 enhancements to it expire.<\/p>\n<p>On your 2022 return, for example, you may claim a maximum of 35% on up to $3,000 in expenses for one person, or up to $6,000 of expenses for two or more people. It is a non-refundable credit, meaning you may only claim it if you have federal income tax liability to offset.<\/p>\n<p>For tax year 2021, by contrast, the credit was fully refundable and was worth a maximum of 50% on up to $4,000 in expenses for one person or up to $16,000 for two or more.<\/p>\n<p>Here\u2019s how much of a difference that makes, Pickering said. This year, if you have one child or dependent, you can only get a maximum credit of $1,050 ($2,100 for two or more). By contrast, last year your credit would have been $4,000 (or $8,000 for two or more).<\/p>\n<p><strong>Earned Income Tax Credit for those without children<\/strong>: The EITC, which is a refundable credit, has been a way to financially help low- and moderate-income workers (defined in 2022 as those with earned income under $59,187), and especially filers with children.<\/p>\n<p>The EITC is also available to earners without qualifying children. But the size of the credit for someone in this group is just $560 for 2022. That is almost $1,000 less than the $1,502 they were allowed to claim in 2021 as a result of a one-year enhancement that was part of the American Rescue Plan.<\/p>\n<p>Charitable deductions: In order to justify itemizing your 2022 deductions, which include charitable contributions, they will need to exceed the standard deduction of $12,950 for single filers or $25,900 for those married filing jointly.<\/p>\n<p>Most filers don\u2019t itemize. That typically means any charitable contributions they made during the year aren\u2019t reported on their returns because they got subsumed under the standard deduction.<\/p>\n<p>But for tax years 2020 and 2021, filers were allowed to take what\u2019s called an above-the-line deduction for charitable contributions up to $300 ($600 if married filing jointly) in addition to the standard deduction.<\/p>\n<p>That above-the-line deduction, however, has expired.<\/p>\n<p>Severance payments: If you were laid off last year and received a lump sum payment for severance, that money will be taxable in 2022. So if it happened late in the year, that may bump your 2022 income into a higher bracket, much the way a big one-time bonus might.<\/p>\n<p>Or if you got unemployment benefits, make sure the state was withholding taxes on those payments. If not, that could mean you might have to send the IRS a check, Pickering noted.<\/p>\n<h2 id=\"paragraph-5af2aae1-897d-3339-aa17-cb5b72c309aa\" class=\"subheader\" data-editable=\"text\" data-uri=\"archive.cms.cnn.com\/_components\/subheader\/instances\/paragraph_5AF2AAE1-897D-3339-AA17-CB5B72C309AA@published\" data-component-name=\"subheader\">Ways to potentially increase your refund or reduce your 2022 tax bill<\/h2>\n<p class=\"paragraph inline-placeholder\" data-uri=\"archive.cms.cnn.com\/_components\/paragraph\/instances\/paragraph_7F9DE2DA-7193-3791-9DD1-CB51C57D9E66@published\" data-editable=\"text\" data-component-name=\"paragraph\">Tax year 2022 is over, but there still may be a few things you can do now to increase the money the IRS sends you or reduces the amount you will owe.<\/p>\n<p class=\"paragraph inline-placeholder\" data-uri=\"archive.cms.cnn.com\/_components\/paragraph\/instances\/paragraph_8992FEF1-AB00-142D-BE20-CB51C57F6209@published\" data-editable=\"text\" data-component-name=\"paragraph\"><strong>Review last year\u2019s return:<\/strong>\u00a0While several tax breaks are less generous now, review your 2021 return to make sure you claimed all the enhanced ones you were eligible for, Pickering said.<\/p>\n<p class=\"paragraph inline-placeholder\" data-uri=\"archive.cms.cnn.com\/_components\/paragraph\/instances\/paragraph_4519E484-8B3B-064B-B604-CB51C586DD45@published\" data-editable=\"text\" data-component-name=\"paragraph\">If you didn\u2019t claim them, \u201cfile an amended return for 2021,\u201d she suggested.<\/p>\n<p class=\"paragraph inline-placeholder\" data-uri=\"archive.cms.cnn.com\/_components\/paragraph\/instances\/paragraph_1F8DE98B-C8C1-56C0-777D-CB752B9C1F79@published\" data-editable=\"text\" data-component-name=\"paragraph\"><strong>Use your capital losses:<\/strong>\u00a0If you sold assets in 2022 at a gain, you will owe tax on that gain. Unless, that is, you sold other assets at a loss that was equal or greater in size to your gain. Your\u00a0<a href=\"http:\/\/www.cnn.com\/2022\/05\/11\/success\/tax-loss-harvesting-feseries\/index.html\" target=\"_blank\" rel=\"noopener\">losses can offset<\/a>\u00a0your gains dollar for dollar. And if you still have losses left over after doing that you may also apply them against $3,000 of your ordinary income for 2022. Any excess losses beyond that may be used in future tax years.<\/p>\n<p class=\"paragraph inline-placeholder\" data-uri=\"archive.cms.cnn.com\/_components\/paragraph\/instances\/paragraph_63CBF5C0-44DE-27AF-4DAE-CB7A0A56693E@published\" data-editable=\"text\" data-component-name=\"paragraph\">If all you did was book capital losses this year, you can still offset your income up to $3,000 and carry forward the rest.<\/p>\n<p class=\"paragraph inline-placeholder\" data-uri=\"archive.cms.cnn.com\/_components\/paragraph\/instances\/paragraph_75E4909A-7DA9-6EB3-9F2C-CB77E5910CE4@published\" data-editable=\"text\" data-component-name=\"paragraph\">These loss rules also apply to\u00a0<a href=\"http:\/\/www.cnn.com\/2022\/11\/11\/success\/crypto-losses-tax-harvesting-ftx-crtp\/index.html\" target=\"_blank\" rel=\"noopener\">crypto losses<\/a>.<\/p>\n<p class=\"paragraph inline-placeholder\" data-uri=\"archive.cms.cnn.com\/_components\/paragraph\/instances\/paragraph_66B9E8AA-1A6F-726B-EBB7-CB51C58D9C75@published\" data-editable=\"text\" data-component-name=\"paragraph\"><strong>Make an IRA contribution:<\/strong>\u00a0You still may make 2022 contributions to an IRA up until April 18, 2023. The annual limit on those contributions is $6,000 ($7,000 if you\u2019re 50 or older).<\/p>\n<p class=\"paragraph inline-placeholder\" data-uri=\"archive.cms.cnn.com\/_components\/paragraph\/instances\/paragraph_4C484D49-E4CC-C081-5043-CB51C5949A34@published\" data-editable=\"text\" data-component-name=\"paragraph\">Your contributions\u00a0<a href=\"https:\/\/www.irs.gov\/retirement-plans\/plan-participant-employee\/2022-ira-contribution-and-deduction-limits-effect-of-modified-agi-on-deductible-contributions-if-you-are-covered-by-a-retirement-plan-at-work\" target=\"_blank\" rel=\"noopener\">may be deductible<\/a>\u00a0if you make them to a traditional IRA. But how much is deductible<strong>\u00a0<\/strong>depends on two things: Whether you have access to an employer-sponsored plan at work and your modified adjusted gross income.<\/p>\n<p class=\"paragraph inline-placeholder\" data-uri=\"archive.cms.cnn.com\/_components\/paragraph\/instances\/paragraph_1FFEC8C7-574A-8DF4-09F7-CB51C5A21FAB@published\" data-editable=\"text\" data-component-name=\"paragraph\">To get the full deduction, neither you nor your spouse can be covered by a retirement plan at work. Or, if you do have access to a workplace plan, you can still take the full deduction if modified AGI is $68,000 or less ($109,000 or less if married filing jointly).<\/p>\n<p class=\"paragraph inline-placeholder\" data-uri=\"archive.cms.cnn.com\/_components\/paragraph\/instances\/paragraph_7CF89B07-ACD9-3B76-B3A6-CB51C5A416C7@published\" data-editable=\"text\" data-component-name=\"paragraph\">But if you have access to a plan and your income is higher, the math is different. You can get a partial deduction if your modified AGI is over $68,000 but below $78,000 (over $109,000 but below $129,000 if a joint filer).<\/p>\n<p class=\"paragraph inline-placeholder\" data-uri=\"archive.cms.cnn.com\/_components\/paragraph\/instances\/paragraph_CCFC7836-8AA9-1980-5290-CB51C5ACA099@published\" data-editable=\"text\" data-component-name=\"paragraph\">If your income tops $78,000 (or $129,000), however, you may not take any deduction.<\/p>\n<p class=\"paragraph inline-placeholder\" data-uri=\"archive.cms.cnn.com\/_components\/paragraph\/instances\/paragraph_2966C5CC-26A4-DCEC-4CB4-CB51C5C2FEAD@published\" data-editable=\"text\" data-component-name=\"paragraph\"><strong>Max out your Health Savings Account contributions:<\/strong>\u00a0If you already opened a\u00a0<a href=\"https:\/\/www.irs.gov\/pub\/irs-dft\/p969--dft.pdf\" target=\"_blank\" rel=\"noopener\">Health Savings Account\u00a0<\/a>last year and are covered by an HSA-eligible health plan, you may still make your deductible 2022 contributions until the April 18 tax filing deadline.<\/p>\n<p class=\"paragraph inline-placeholder\" data-uri=\"archive.cms.cnn.com\/_components\/paragraph\/instances\/paragraph_B93C7638-3FB2-644B-05E7-CB51C5C90230@published\" data-editable=\"text\" data-component-name=\"paragraph\">The maximum you may contribute is $3,650 for single coverage, or $7,300 for family coverage. Anyone who was 55 or older by the end of December may contribute another $1,000.<\/p>\n<p style=\"text-align: right;\" data-uri=\"archive.cms.cnn.com\/_components\/paragraph\/instances\/paragraph_B93C7638-3FB2-644B-05E7-CB51C5C90230@published\" data-editable=\"text\" data-component-name=\"paragraph\">Source <a href=\"http:\/\/bit.ly\/3WK3AyQ\">CNNBUSINESS\u00a0<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Official tax-filing season kicks off Monday, January 23, and it may hold some surprises for your wallet. So, whether you expect to file your 2022 federal income tax return right away or wait until the last minute, now is a good time to get a sense of whether you\u2019ll owe more money to the IRS, [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":10973,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-2428","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-sin-categoria"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Your tax refund may be smaller this year. 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