There are a lot of factors that go into determining your tax refund each year, including the state you live in and how much money you make. But here’s one thing to keep in mind: just because it doesn’t seem like your taxes went up this year doesn’t mean they didn’t. There is always inflation or other economic events going on behind the scenes.
The “why is my tax refund less than what i filed” is a question that many ask themselves. The answer to this question is not easy, but there are some factors that can increase the amount of your refund.
Have you completed your taxes yet? I certainly hope so!
Many Americans might be surprised when they submit their taxes and get their anticipated tax return.
According to tax experts, owing to pre-payments on the Child Tax Credit, Americans may get a lesser tax return than they think.
According to Dean Lyman, CFP, “I predict many households to get lesser tax returns this year.” Only individuals who did not obtain the Advance Kid Tax Credit during the final six months of 2021 or who have had a new child since the end of 2020 would receive a bigger refund. Almost all other households who received checks will get refunds that are less than 2020 (if all other tax variables are equal!)
Consider the Advance Child Tax Credit, which is provided to the majority of eligible families. The Child Tax Credit Advance was a payout equal to half of the new Child Credit amount. In 2020, the Kid Tax Credit was doubled from $2,000 to $3,600 for each child under the age of six. It went from $2,000 to $3,000 for each kid aged 6 to 16. The IRS issued Advance checks for half of these increased amounts. If you had two children, ages 10 and 14, your Advance checks would total $3,000 ($1,500 each).
As a result, the Child Tax Credit that you may claim in 2021 is only half of the newer, higher amount. Because of this restriction, you may claim $4,000 for your two children in 2020 but only $3,000 in 2021.
This is why many families’ tax refunds will be lesser than expected; they previously received a large portion of this money via Advance Child Tax payments.
Unfortunately, few families see the connection between the two occasions! They just know they received government funds, and now they aren’t receiving the full tax credit (despite the fact that it is larger!).
CFP Marcus Blanchard adds. Unfortunately, the majority of Americans with children will see their tax refunds decrease. This drop is due to the IRS’s decision to give the Expanded Child Tax Credit payments in monthly installments throughout the year rather than all at once when you submit your taxes, as is customary.
Because the IRS pre-paid some of your refund earlier in the year, even if your OVERALL tax payment may be lower (particularly if you’ve had any additional kids this year), your overall return may be smaller.
Many parents who were having trouble paying their expenses benefited from the prepaid Child Tax Credit. However, these same parents may be disappointed when it comes to receiving their tax return.
A Penny Saved
Hi! I’m a millennial parent who is interested in personal finance. I’ve always been “into” personal finance, but following a time of lengthy unemployment, I was motivated to create my blog. That encounter fundamentally altered my perspective on money and the necessity of easily available personal financial education.
The “average tax refund by income 2022” is a table that shows the average amount of tax refunds for different incomes in the United States. The data was collected from the Tax Foundation and is based on information from 2014.
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