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Tuesday, January 31, 2023

Lack Of Federal Stimulus Check In 2022 To Influence Your Refund Amount

The IRS informed that federal income tax filers will receive a smaller refund stimulus check for the tax year 2022 than in the previous two. There are several factors that cause this change. One is the lack of stimulus checks from Washington in 2022. The second is that several changes have been made to the tax code this year.

 For instance, the tax authorities have warned that taxpayers who opt for the standard deduction will no longer have the option to deduct their contributions to charity. Further, the American Rescue Plan Act of 2021 has announced that it is lowering the reporting threshold for 3rd party networks that process business payments.

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Form 1099-K, used by 3rd party networks, will henceforth be triggered by a single transaction greater than $600. Earlier the threshold that triggered the 1099-K used to be much higher at aggregate transactions worth $20,000.

Further, several big refunds for the last two tax years ( 2020 and 2021) were allotted as income tax filers who did not receive their stimulus check could conveniently claim them when filing their income tax returns.

For income tax filers using payment processors and also receiving a form 1099-K for income not earner, including personal expense reimbursements or personal gifts, items that are not part of the taxable items, the form cannot be corrected. This was informed by the IRS, which informed that the income taxpayers will instead have to contact the issuer.

New And Expanded Tax Credits Available To Income Tax Filers

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A few expanded or new tax credits may also be available for income taxpayers. This includes the Clean Vehicle Credit and the Premium Tax Credit.

The PTC, or the Premium Tax Credit, is a refundable credit that enables eligible households and individuals to cover the premium for the health insurance they have purchased through the Health Insurance market. To ensure the PTC, income tax filers must meet several requirements and file their income tax returns with Form 8962, Premium Tax Credit (PTC).

Stimulus Check Tax Refund
Stimulus Check

The American Rescue Plan Act temporarily expanded eligibility for PTC for 2021 and 2022 through the elimination of the rule that a taxpayer with a household income greater than 400% of the federal poverty line cannot qualify for any PTC.

For the 2021 unemployment compensation stimulus check, if any income tax filer or their spouse receives or has obtained any approval to receive unemployment compensation for any week in 2021, the amount of the income for the household is considered not more than 133% of the federal poverty line for the family size.

The tax authorities have revealed that there were as many as 3.7 million unprocessed individual income tax returns that they received 2022 by November 11, 2022. There are a further 900,000 unprocessed Forms 1040-X for amended income tax returns. The IRS has informed us that they are in the process of amending these income tax returns in the order they have received them, and the present timeframe can be over 20 weeks.

The tax authorities have informed that tax filers should regularly check Where’s My Amended Return to get the most recent status of processing available.

Delay In The 2023 IRS Income Tax Refund

While the answer to the perennial question that is top almost every year, “when can I expect my tax refund?” is seldom exact, there are a few factors that help income tax filers make an educated guess. With the 2022 tax year ending weeks away, it is now time to begin thinking about filing income tax now even before the 2022 tax year draws to an end.

There is time yet to take advantage of some strategies that can lower a filer’s income tax bill or increase their refund, with the latter bound to be negatively affected due to lack of stimulus checks.

For income tax filers who have affected major changes in income in the current year, got married or divorced, welcomed home a child, bought a home, retired, changed investments, or made other truly significant changes in life, they should consult a tax professional before moving ahead with their filings. And the earlier they do it, the more chance that they can affect positive changes in their income tax refund. This assumes significance in the absence of a stimulus check.

The 2023 income tax filing season could turn out to be normal, closer to the one in 2019, the last filing season before the whole matter was affected by the onset of the COVID-19 pandemic. The pandemic caused widespread office closures, and the IRS functioning too was widely affected and delayed the 2020 tax filing deadline by several months.

The pandemic also ushered in several tax credits and deductions for businesses and also stimulus check payments for most American tax filers. There were also income tax credits, and stimulus checks paid as an advance against taxes. The credits were given even before the end of the tax year in many cases, such as the expanded Child Tax Credit stimulus check.

Stimulus Check
Stimulus Check

Individual taxpayers can hope to avoid such issues for the upcoming income tax filing season. The tax season deadline in the normal process is April 18, 2023, for filing income tax returns for income earned during the 2022 financial year. Filers can also file automatic extensions, thus giving them an extra 6 months to file their income tax returns.

The tax filing deadline for 2023 is on April 18 instead of April 15 as the standard deadline falls on a Saturday. When the deadline comes on any weekend, the IRS pushes back the deadline to the coming business day. But April 17, 2023, is Emancipation Day, a recognized holiday in Washington, D.C., the headquarters of the IRS.

April 17 also happens to be Patriot’s Day, which is a state holiday in Massachusetts and Maine. As a result of this, the deadline for filing federal income tax returns comes on the next working day, which is April 18, 2023. Most states also adopt the federal tax calendar for their state income tax returns.

Filing For A Extension For Filing Income Tax Returns

Taxpayers who are not able to get their papers in order before the April 18 deadline can easily apply for an extension under Form 4868. This will give the filer time until October 17, 2023, to file their income tax return. Filers do not have to give any excuse or reason to benefit from this extension. But any stimulus checks that are part of the refunds will also be delayed as a result.

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