Due to the absence of stimulus payments in 2022, the IRS issued a warning on Tuesday that tax refunds might be less. It also mentioned that a pandemic-era provision that permitted anyone claiming the standard deduction to claim a tax deduction of up to $300 for monetary donations to charity in 2020 and 2021 hasn’t been extended. Again, itemizing is the only way to deduct charitable donations.
Millions of Americans who depend on tax refunds for major purchases, savings, investments, or debt repayment may find this troubling. According to a LendingTree survey conducted in 2022, 46% of taxpayers stated they relied on their refunds to pay for part of those expenses.
What are some tips to lower your tax bill or get a bigger refund?
- Check eligibility for the premium tax credit,a reimbursable credit that aids qualified people and families in paying the premiums for health insurance plans obtained via the Health Insurance Marketplace. A refundable credit is one that entitles you to a refund of the difference if the credit exceeds the amount of taxes owing.
The restriction that states a taxpayer cannot be eligible for a premium tax credit if their household income is more than 400% of the federal poverty level was temporarily lifted for tax years 2021 and 2022. Your income qualifies automatically if you earned any unemployment benefits throughout the year.
- Check eligibility for the clean vehicle credit. Purchasers of specific electric vehicles have until December 31 to take advantage of the $7,500 federal tax credit.
- Harvest losses. You’re probably going to notice some losses this year if you look through your investment holdings. You can utilize a loss on a sale to lower your taxable capital gains and possibly deduct up to $3,000 of your ordinary income.
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When to expect your tax refund
The IRS has advised individuals not to plan on getting a refund of their 2022 taxes by a certain date since some submissions may need “extra examination,” which might cause a delay in the procedure.
In general, electronically completing a faultless return and receiving payment via direct deposit will result in a quicker refund. However, the government warned that errors and other problems, such identity theft, could delay your reimbursement.
According to the IRS, reimbursements for tax filers who claimed the earned income tax credit or the child tax credit won’t arrive until mid-February.
READ MORE: Missing Stimulus Checks: IRS Owes COVID-19 Relief to 10 Million Americans; Are You One of Them?
