As a taxpayer, you get a federal refund whenever it turns you overpaid taxes throughout the year or had withheld from your paychecks more than what you ultimately owe. If you enjoyed getting a few nice, big refunds in recent years, you might have been disappointed with your numbers when you filed your taxes—and you’re not alone.
The IRS itself recently warned taxpayers that refunds are indeed smaller this year. The main reason is a loss of pandemic-era benefits, which are what led to increased, much-needed, but tragically temporary relief the previous two tax years. (And if you missed the April 18 deadline and didn’t seek an extension, you should file your taxes ASAP.)
If you got everything in on time and are still disappointed with what you’re getting back from the government, here’s what you need to know about the changes that affected this past tax year.
The loss of pandemic-era benefits
In response to financial fallout from COVID-19, state and federal governments provided various stimulus programs and expanded several tax credits. Unfortunately, those changes were not permanent, and the loss of pandemic-era benefits is likely reflected on your 2022 tax return.
No more stimuli
Anyone who didn’t already receive their 2021 COVID relief checks in the mail would have seen it reflected in their tax refund in calendar year 2022. But with no COVID stimulus checks going out at all in 2022, there was no additional relief to factor in to the tax refund you’ll receive in 2023.
Smaller child tax credit
In 2021 Congress expanded the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC) significantly—but only temporarily. Those credits contracted again in 2022.
Taxed state relief
The good news: Last year, over 50 million Americans received some form of stimulus check from their states. The bad: Those state perks may be taxed by the federal government. The fed may have counted your state-specific check as income, which means you might owe additional taxes. (Here’s how to check if the government—state or federal—still owes you stimulus money stimulus money.)
The bottom line for your 2022 taxes is that things are back to pre-pandemic norms, only with post-pandemic inflation. Great.
As we noted above, if you didn’t manage to file your taxes on time, you should file a return as soon as you can, and, if you owe, pay as much of your owed tax as possible as soon as possible to reduce penalties and interest.
