You might get a smaller tax refund this filing season, IRS says. Here’s what to know

Taxpayers could see smaller returns this filing season because of recent changes to the tax code, the Internal Revenue Service announced on Nov. 22.

Here’s what some of the changes could mean for you and your household:

End of stimulus payments

Many taxpayers received additional stimulus payments with their tax refunds in recent years through Economic Impact Payments that were issued to help people cover their expenses during the COVID-19 pandemic. No such payments were issued in 2022, so taxpayers won’t see a boost in their return. The last Economic Impact Payment was issued in March 2021.

Charitable deductions

Those who take the standard deduction when filing their taxes rather than itemizing will not be able to deduct their charitable contributions as they have in past years. In 2021, the IRS temporarily allowed individuals to deduct $300 per person in charitable contributions without itemizing other deductions, according to the Daffy Charitable Fund. But in 2022, those who want to deduct their charitable gifts will have to itemize other deductions as well.

Payments from third-party processors

The reporting threshold for third-party payment networks that process business transactions has been lowered, according to the IRS. Now, if a taxpayer receives a payment of more than $600 via a third-party payment network, such as Venmo or CashApp, for goods and services, they will need to report the income on a 1099-K form.

Prior to 2022, the form was only issued if the filer received more than 200 transactions totaling more than $20,000 a year from a third-party payment network. The change will not affect those who use Venmo for personal uses, such as to split a bill at a restaurant, according to KWTX. But it will affect those who use the platforms for their small businesses or to sell products.

Tax credits

Refunds for those claiming certain tax credits may be delayed, according to the IRS. Taxpayers claiming the Earned Income Tax Credit, which helps those who earn low-to-moderate incomes receive a tax break, or the Additional Child Tax Credit, which provides assistance to low- to moderate-income working parents, will not be able to receive their refunds before mid-February. This is due to the IRS taking extra time to review filings for potential identity theft.

“The IRS cautions taxpayers not to rely on receiving a 2022 federal tax refund by a certain date, especially when making major purchases or paying bills,” the agency said in a statement. “Some returns may require additional review and may take longer.”

Some taxpayers may qualify for additional tax credits this year. The Premium Tax Credit, which can help families cover health insurance premiums, has once again expanded eligibility requirements. Those who earn a household income above 400% of the federal poverty line are still eligible for the tax credit in 2022.

Also, some filers may qualify for the Clean Vehicle Credit, which was implemented through the Inflation Reduction Act of 2022. Buyers of new electric vehicles can get up to $7,500 in tax credits.

Taxpayers can use the IRS’ Interactive Tax Assistant at: https://www.irs.gov/help/ita to determine whether they are eligible for certain credits.

Unprocessed returns

As of Nov. 11, the IRS still had 3.7 million unprocessed individual returns, according to the agency.

“Of these, 1.7 million returns require error correction or other special handling, and 2 million are paper returns waiting to be reviewed and processed,” the agency said.

The IRS also had 900,000 unprocessed amended returns that could take more than 20 weeks to process. Taxpayers who submitted amended returns can check the status here: https://www.irs.gov/filing/wheres-my-amended-return .

Tax withholding estimator

Taxpayers can also use the IRS’s online “Tax Withholding Estimator” that helps people determine exactly how much should be withheld from each paycheck. The website can help earners determine if they need to make adjustments to their withholding so that they don’t owe money when they file, the IRS said.

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