IRS, local tax pros say changes may signal smaller refunds this year
Apr. 4—Income tax return filers with children and those who switched jobs last year should be aware of changes that may impact possible refunds, tax preparers said Monday, with the annual deadline to file two weeks away.
A higher child tax credit for 2022 filers has been trimmed to its normal amount this year, making refunds smaller or possibly eliminating them in certain instances, according to tax professionals.
Other factors may also make refunds smaller, according to the Internal Revenue Service. Taxpayers will not receive an additional stimulus payment with their tax refund because there were no Economic Impact Payments for 2022.
"In addition, taxpayers who don't itemize and take the standard deduction won't be able to deduct their charitable contributions like they were able to on their 2021 returns," IRS officials said in guidance to tax filers.
Meanwhile, federal tax withholding forms that workers fill out when starting a new job should be more scrutinized as the information employees provide could also impact refunds, local officials said.
More than 168 million individual tax returns are expected to be filed this year, with the vast majority of those coming before the April 18 federal deadline, according to the IRS.
The filing deadline is extended — both for federal and state tax returns — because the normal April 15 date is on a Saturday. Some cities have different deadlines for local income tax forms, such as Springboro, which has a May 1 deadline this year.
Tax officials also remind local residents to check which city or jurisdiction their local city taxes go to. In the past three years, thousands of Ohioans started working at home, rather than in a company office, which could change which city gets their local income taxes, and what tax rate is in effect.
A significant change from last year is the child tax credit returning to its pre-pandemic status. The credit was hiked to $3,600 for the 2021 tax year for children under age 6 and $3,000 for other children 17 and younger, but reverts to its standard maximum deduction of $2,000 this year, professionals said.
That's one reason filers may see lower refund amounts or end up paying more, said Joel Veldt, a certified public accountant at Ladd & Carter Tax Service in Dayton.
Last year, "a lot of people got a couple thousand dollars more than they're used to, and that was a one-year thing," he said.
Also, adjustments to withholding taxes were implemented a couple of years ago, Veldt added.
"And it looks like some companies didn't get it adjusted in their payroll until 2022, and so they had less withheld," impacting refunds, Veldt said.
Terry Krupp, director of tax and accounting for Laird's Tax & Accounting in Springfield, said he is seeing another reason for a drop in refunds.
"People are owing money that typically don't, especially if they change jobs," Krupp said.
The W-4 form new workers fill out at new jobs has been revised in recent years and can result in unexpected changes for employees, he said.
"It surprises a lot of people because they're expecting a refund and all of a sudden" they "owe a little bit of money. That's been relatively consistent," Krupp said.
For those yet to file returns, Veldt encouraged verifying all necessary documents are in hand before submitting them, a practice endorsed by the IRS.
Sometimes, taxpayers file their returns "and then two weeks later they get another form in the mail of an investment they forgot they had," he said.
Already, Veldt said, he is recommending clients who have yet to file seek an automatic six-month, federal extension.
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Check your refund
Federal income tax filers can check the status of their 2022 income tax refund 24 hours after e-filing at https://www.irs.gov/refunds. Information is updated once a day, overnight. Filers need the following:
—Social Security or taxpayer ID number
—Filing status
—The exact refund amount on your return.
Source: Internal Revenue Service
