Over the past two years, stimulus checks have assisted millions of Americans in meeting their financial obligations. It is anticipated that taxpayers would receive fewer tax refunds in the upcoming year. The IRS has issued a warning to taxpayers that their tax refunds in 2023 might be less than the amount received this year.
Why Tax Refunds May Be Smaller In 2023 Due To No Stimulus Checks
Tax refunds are typically offered to those who overpaid their taxes or retained more money than they should have. Since they also received the stimulus check and the child tax credit this year, many taxpayers earned sizable refunds. Tax refunds, however, might be less in 2023 than in 2022.
This is because the majority of taxpayers have already collected their federal benefits, and no government stimulus cheques were delivered in 2022. In a press statement from November, the IRS warned that refunds “may be less in 2023.” “There were no economic impact payments for 2022, therefore taxpayers will not receive an additional stimulus payment with a 2023 tax refund.”
The average refund for the 2022 filing season was $3,176, up from $2,791 in 2021, according to the IRS. Tax refunds in 2023 may also be less generous because it will be more challenging to deduct charitable contributions on the 2022 return.
In response to the COVID-19 outbreak, Congress provided charities with a tax break for cash donations in 2020. The same perk was also made available for 2021 by lawmakers. For 2022, the tax break was not, though. It implies that if taxpayers are taking the standard deduction, they are no longer eligible for advantages for charitable contributions.
If a taxpayer didn’t itemize other deductions in 2021, the IRS permitted them to deduct $300 per person or up to $600 per family for charitable contributions. This Stimulus Check benefit is no longer accessible.