Your Tax Refund Could Be Smaller Next Year, IRS Warns — Here's Why And the money you do get back might not be timely either.
Many Americans rely on tax refunds to pay bills and save for retirement, but next year's checks could be significantly smaller than in previous years.
In a November press release, the IRS revealed that taxpayers may see less money back in 2023, as there were no stimulus checks in 2022, and those who do not itemize and instead take the standard deduction will be unable to deduct their charitable contributions.
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Generally, taxpayers receive a federal refund when they've overpaid yearly taxes or withheld more than the amount owed. The average refund for the 2022 filing season was $3,176 as of October 28, per the IRS — an almost 14% increase from $2,791 in 2021.
Congress offered tax incentives for charitable cash gifts during the Covid-19 pandemic, and the tax break was extended for 2021, CNBC reported. But that exception no longer applied in 2022.
"Deductions for charitable donations in 2022 are not as robust as 2021," certified financial planner Marguerita Cheng, CEO of Blue Ocean Global Wealth in Gaithersburg, Maryland, told the outlet.
Related: How a Business Owner Won Back $102,000 From the IRSAdditionally, the IRS has cautioned taxpayers not to expect their refunds "by a certain date," as some filings will be subject to "additional review." As of November 18, 3.4 million returns received in 2022 remained unprocessed, the IRS reported.