According to MARCA, there are 8 changes that are to be expected to affect the tax refunds taxpayers will receive in 2023. Read the list to learn about these changes!
The tax code was already difficult to foresee even before the COVID-19 pandemic began. However, between the stimulus payments, COVID-related tax deductions, and extended tax deadlines, it became more difficult to file tax returns. What made it much worse is that the tax refunds taxpayers will receive in 2023 might be affected by several changes.
No Stimulus Payments
MARCA says the first change that might affect tax refunds is that no one has received stimulus payments in 2022. Stimulus payments are incomes that are not deducted with taxes. Hence, stimulus payments are a big help to reimburse expenses without suffering from a higher tax bracket.
Charitable Deduction Is Expiring
The second change is that the charitable tax deduction is expiring soon. Overall taxable income is reduced by tax deductions. Unfortunately, the charitable tax deductions are already expiring at the end of the year.
Higher Tax Brackets
The third change is that the tax brackets have increased. The tax bracket determines how much taxes a taxpayer must pay. Unfortunately, at the end of 2021, the Congress increased the 2022 tax brackets.
State Taxes Must Be Paid
The fourth change is that state taxes must still be paid even though student loan debts will be forgiven. Students may even pay the same amount of state taxes as their forgiven debts depending on what state the student lives in.
EITC Returned To Normal
The fifth change is that the Earned Income Tax Credit (EITC) has returned to normal. The EITC has a tax deduction for taxpayers with low income. However, EITC reverted back to its strict qualifications regarding tax deductions.
Some Refunds Are Processed Longer
The sixth change is that tax documents that are physically mailed will take longer to process than those filed online. Therefore, tax refunds will not arrive sooner than six months.
IRS Expects Cryptocurrency Reports
The seventh change is that the Internal Revenue Service (IRS) expects to receive reports on cryptocurrency transactions from taxpayers. If a taxpayer lost money while trading crypto, the taxes they owe may be reduced.
Child Care and Dependent Tax Credit Returned To Normal
Lastly, MARCA says the Child Care and Dependent Tax Credit has returned to normal. Like EITC, strict qualifications like during pre-pandemic are applied again.