Author Topic: Why the IRS says to expect smaller tax refunds this year  (Read 302 times)

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Offline mystery-ak

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Why the IRS says to expect smaller tax refunds this year
« on: January 25, 2023, 02:38:18 pm »
 Why the IRS says to expect smaller tax refunds this year
by Tobias Burns - 01/25/23 6:00 AM ET

The IRS is warning taxpayers at the opening of the 2023 tax filing season that they should expect smaller refunds due to pandemic relief measures that have been allowed to expire.

A big reason is that there were no stimulus payments from the government to people to help get them through the pandemic in 2022. The last stimulus payments went out in 2021.

Millions received those stimulus payments as a recovery rebate credit that was effectively given as a tax refund.

Millions more received help through the pandemic through an expanded child tax credit (CTC) that many progressives saw as an effective and important social safety net. That credit was allowed to expire by Congress at the end of 2021.

“Due to tax law changes such as the elimination of the Advance Child Tax Credit and no Recovery Rebate Credit this year to claim pandemic-related stimulus payments, many taxpayers may find their refunds somewhat lower this year,” the IRS said in a news release on Monday.

A tax break for charitable deductions was also allowed to expire, which could affect more taxpayers.

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https://thehill.com/policy/finance/3828849-why-the-irs-says-to-expect-smaller-tax-refunds-this-year/
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Offline Bigun

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Re: Why the IRS says to expect smaller tax refunds this year
« Reply #1 on: January 25, 2023, 02:44:30 pm »
And the fact that rampant inflation drives many into a higher bracket. As intended.
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Offline catfish1957

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Re: Why the IRS says to expect smaller tax refunds this year
« Reply #2 on: January 25, 2023, 02:48:55 pm »
I hope everyone  realizes that 9% underpayment during the year is the ultimate sweet spot if you have the means to track it to the penny.

I aim at 5% to be safe, and in case of unexpected windfalls.   Those getting refunds are basically letting the IRS keep your money interest free. That same money could be earning 2% at least in low yielding CD's. 4-5% in decent corporate bonds, or near 10% in equities.

OTOH, if you aren't keeping good records or tracking closely, I'd at at least aim at zero. I've always lamented that if it was really known, the IRS should be adding thank you notes to those refund checks. 
« Last Edit: January 25, 2023, 02:57:19 pm by catfish1957 »
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Re: Why the IRS says to expect smaller tax refunds this year
« Reply #3 on: January 25, 2023, 02:51:16 pm »
I hope everyone  realizes that 19% underpayment during the year is the ultimate sweet spot if you have the means to track it to the penny.

I aim at 15% to be safe, and in case of unexpected windfalls.   Those getting refunds are basically letting the IRS keep your money interest free. That same money could be earning 2% at least in low yielding CD's. 4-5% in decent corporate bonds, or near 10% in equities.

OTOH, if you aren't keeping good records or tracking closely, I'd at at least aim at zero. I've always lamented that if it was really known, the IRS should be adding thank you notes to those refund checks. 

Why 19%?
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Offline catfish1957

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Re: Why the IRS says to expect smaller tax refunds this year
« Reply #4 on: January 25, 2023, 02:56:38 pm »
Why 19%?

Wow, and oops...  I meant 9%, and 5% target. Need more coffee.

And thanks for waking me up.   :beer:

10% is the actual underpayment threshhold.
« Last Edit: January 25, 2023, 02:58:28 pm by catfish1957 »
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Offline GtHawk

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Re: Why the IRS says to expect smaller tax refunds this year
« Reply #5 on: January 25, 2023, 07:27:27 pm »
I have a question, what's a tax refund?

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Re: Why the IRS says to expect smaller tax refunds this year
« Reply #6 on: January 25, 2023, 07:28:58 pm »
I have a question, what's a tax refund?

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Re: Why the IRS says to expect smaller tax refunds this year
« Reply #7 on: January 25, 2023, 08:06:38 pm »
And the fact that rampant inflation drives many into a higher bracket. As intended.
Or not. I have had no raises since before COVID, but my money has lost about 15% of its value.

So, net pay cut.
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Re: Why the IRS says to expect smaller tax refunds this year
« Reply #8 on: January 25, 2023, 08:11:53 pm »
Wow, and oops...  I meant 9%, and 5% target. Need more coffee.

And thanks for waking me up.   :beer:

10% is the actual underpayment threshhold.

I thought you were going for the estimated tax payment safe harbor, but 19% seemed a bit high.
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Offline Elderberry

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Re: Why the IRS says to expect smaller tax refunds this year
« Reply #9 on: January 25, 2023, 09:54:33 pm »
Back before the underpayment penalty, my dad would wait to pay until after all the extensions ran out, and then would pay after he received the third demand letter from the IRS. He would not be penalized. He just had to pay interest. I had to do it myself just once.

Offline catfish1957

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Re: Why the IRS says to expect smaller tax refunds this year
« Reply #10 on: January 25, 2023, 11:06:09 pm »
I have a question, what's a tax refund?

lol....

I've kept every 1040 just for fun, and my last one was in 1976.
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Re: Why the IRS says to expect smaller tax refunds this year
« Reply #11 on: January 25, 2023, 11:08:44 pm »
lol....

I've kept every 1040 just for fun, and my last one was in 1976.

You haven't filed since 1976?
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Offline catfish1957

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Re: Why the IRS says to expect smaller tax refunds this year
« Reply #12 on: January 25, 2023, 11:13:05 pm »
You haven't filed since 1976?

 :silly:

my copy....
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Offline christian

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Re: Why the IRS says to expect smaller tax refunds this year
« Reply #13 on: January 26, 2023, 02:04:00 am »
duplicate
« Last Edit: January 26, 2023, 02:05:34 am by christian »
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Re: Why the IRS says to expect smaller tax refunds this year
« Reply #14 on: January 26, 2023, 02:05:04 am »
People fight like hell to install a socialist woke utopia, which we now have, then bawl like babies with loud speakers.  Is there no physicians diagnosing this mental madness?
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