Taxpayers Might Experience “Refund Shock”

Aside from expecting the new year, U.S. taxpayers should also expect a smaller tax refund, which they also call a tax refund shock, after filing their 2022 tax returns. This is because a lot of the pandemic benefits were created to help Americans during the time of the pandemic, which has now expired. However, the refund is not as much as the average refund in 2021 which was over $3,000. 

Now, what can you do to maximize your tax refunds? One option is to hire a professional tax advisor at Accounting & Tax Professionals, PLC, to help you with your taxes. Not everyone can do much about the refund shock, but that’s where our expert tax preparation services can make a difference. Our team of skilled professionals can help you maximize your tax deductions and credits to ensure you get the biggest refund possible. Don’t settle for a small tax refund – let us help you get the most out of your taxes.

Child Tax Credit

Back in 2021, the Child Tax Credit (CTC) reached $3,600 per child under 6 and $3,000 for children aged from 6 to 17. Now in 2022, it has reverted back to its pre-pandemic rate of $2,000 regardless of the child’s age. 

Charitable Tax Donation

The CARES Act allowed taxpayers in 2020 and 2021 to deduct $300 from charity donations for unmarried individuals and $600 for married couples. Unfortunately, this wasn’t renewed in 2022 so taxpayers need to itemize to get an extra deduction on their donation. However, only 9 percent of taxpayers who itemize can reduce their charitable donations.

If you are in the 91 percent of taxpayers who didn’t itemize and/or used the standard deduction rate, we provide accounting services in Des Moines, IA, to benefit from every tax credit available even if they’re not as much as the previous year. 

Child and Dependent Care Tax Credit

The American Rescue Plan increased the tax credit to $8,000 per family during the pandemic to help parents with childcare expenses. Now, this has also reverted back to its pre-pandemic rate. Parents of two or more children can receive 35% of the $6,000 grant. The maximum credit a parent can receive this year is $2,100, parents with one child can only receive a little over $1,000.

Earned Income Tax Credit

This tax credit is for workers with low to moderate income, but unfortunately, it’s also among the others that are back to their previous rate. In 2021, workers with low incomes without children were able to receive a credit of up to $1,500. In 2022, they can now only receive up to $560.

However, low-income parents who are qualified for the EITC can receive a higher credit in 2022. The amount they receive adjusts annually for inflation. In 2021, parents of two receive $5,980 of credit, and in 2022, they receive an amount of $6,164.
Always look for ways to maximize your tax refund, especially today with inflation. There have been many IRS changes in the past year that have taken place. For professional accounting services in Des Moines, IA, give us a call at 515-986-5843 to book an appointment