IRS warns of smaller tax refunds in 2023: How to lower your tax bill and boost your return

As tax season approaches, the IRS has warned that tax refunds may be smaller in 2023, which could make it difficult for some to afford basic necessities, according to a report by USA Today on December 1, 2022.

To lower the tax bill and boost the return, there are steps that can be taken before the end of the year and the start of the 2022 tax season.

First, it is important to review your tax withholding from your 2022 income to make sure you have been paying enough throughout the year. According to the IRS, you can use their online tax withholding estimator to determine if you have been paying enough.

Another way to decrease what you owe the IRS is to reduce your taxable income. This can be done by increasing retirement and 401(k) plan contributions and making charitable donations.

In addition, to lower your tax bill, taxpayers can also consider bunching itemized deductions to clear the threshold for the standard deduction, which is $27,700 for married couples filing jointly or $13,850 for those who are single. After bunching deductions, it may be possible to itemize others.

Tracking tax credit eligibility is another key move to make before the start of the 2022 tax season. Some popular credits include the child tax credit, the earned income tax credit, and the child and dependent care credit. These credits have decreased after increasing due to the pandemic. Other credits that may be available include the premium tax credit and the clean vehicle credit, as well as credits for clean energy improvements.

Getting the paperwork together now is another important step to take in order to avoid overpayment to the IRS. Taxpayers should ensure they have all necessary paperwork and file their tax returns on time by April 18. Using a tax professional or tax software can also help ensure accurate filing.

Taking these steps can help you lower your chances of owing more money to the agency and boost your return, based on the published report by The US Sun on December 27, 2022.