Once again, tax season is upon us. If you aren’t already aware, the 2023 tax season (with 2022’s tax returns) is shaping up to be quite different compared to the 2022 tax season (with 2021’s tax returns).
Many experts expect refunds to be smaller than last year. This is because last year refunds were boosted by extended credits to help taxpayers recover from the shock of the pandemic. This year, most of those benefits will no longer apply, causing many of us to receive smaller returns than we did last year.
Changes to Tax Credits
Some credits that will return to pre-pandemic levels include the child tax credit, earned income tax credit, and child and dependent care credit.
Here are the basics:
- Those who received $3,600 per dependent in 2021 for the child tax credit will receive $2,000 per dependent for the 2022 tax year (if eligible).
- For the earned income tax credit, eligible taxpayers with no children who received roughly $1,500 in 2021 will now receive $500 in 2022.
- The child and dependent care credit will return to a maximum of $2,100 in 2022 instead of the 2021 maximum of $8,000.
Make the Tax Season Easier
Unfortunately, there is nothing you can do about the changes to these credits. However, there are things that you can and should do to reduce your stress this tax season. Get ready for the 2023 tax season by taking these three important steps.
1. Gather your documents.
Few things cause the tax preparation process to drag on more than not having all the documents necessary to file ready to go. Make sure that you and your dependents’ identification is up to date (not expired) and matches your other documentation. Gather documentation for ALL sources of income. That would include W-2s from your employer, various 1099s for unemployment, retirement plan distributions, self-employment (including side hustles), etc. View a full list of what to bring.
2. Verify your bank information.
To avoid delays in receiving your refund, double- or even triple-check your bank account information. Many of us elect to receive our refunds by direct deposit to get the refund back faster. When your bank information is incorrect, the IRS may reject the return itself or your bank may reject the deposit. In some cases, the IRS could also opt to send you a paper check instead of direct deposit, which could take several weeks to receive. Before your appointment, double- or even triple-check your bank information to avoid delays.
3. Make a Tax Day plan.
Who is preparing your return? What time is your appointment? Should you get a babysitter? Gathering all the proper documents will save you time during your appointment. Knowing where you’re going and how to get there, whom you are working with and minimizing distractions are important factors for reducing the stress of this process. Take a little time in the week and days before your appointment to be sure that you have all your ducks lined up to make the day flow smoothly.
ProMedica Financial Wellness Network (FWN) offers free financial coaching in a group and one-on-one setting to people of all zip codes and incomes. All FOC coaches are also trained in the Accenture career success curriculum to assist clients in achieving their employment goals. Sign up for an in-person or virtual financial coaching session. Contact ProMedica Ebeid Center for more information at 567-585-0059 or foc@promedica.org.
