Tax code has been confusing for Americans but the COVID-19 made it more difficult owing to the economic changes and benefits. The pandemic stimulus checks, tax deadlines, and tax refunds have now stopped so most citizens are unaware of how to file their tax returns.
Efficient tax software might be helpful while we list out a few things that might impact your tax refund for 2022.
I. No Additional Stimulus Check Or Tax Refund This Year
Pandemic years had been made easier for Americans by the federal government with stimulus checks but that has stopped. Moreover, the tax refund benefits have also expired and citizens are struggling against financial crisis and inflation. Nonetheless, many US states have stepped up to provide relief payments in the form of tax refunds.
II. Expired Charity Deduction
The tax return on charity has expired and will be liable for the deduction. The Congressional allowance for charitable givers on a particular amount will now experience a standard deduction.
III. Increased Taxation
The tax brackets have now reversed to pre-pandemic days hence low-income individuals will give 10% while higher bracket has to give 37% tax. This also points towards smaller tax refunds.
IV. Loans and debts
Although student loans have been forgiven, the state taxes will have to be repaid on the loan amount.
V. Pre-pandemic EITC
The tax credit on earned income (EITC) meant a tax break for low-income citizens. The Relief Act for Americans 2021 brought changes that helped taxpayers to save more. However, that tax break is no longer available.
VI. Longer Refund Process
There is a window of 21 days to receive refunds from the IRS but they are short-staffed and might take longer.
The IRS has decided to tax transactions in cryptocurrencies.
VIII. Child Tax Credit
CTC has been boosted to include more dependents and children to be eligible and protect them from child poverty.