Americans may receive a smaller tax refund in 2023 — here’s why

Rachel Schilke

December 05, 12:28 PM December 05, 12:28 PM

Video Embed

American taxpayers should prepare for smaller tax refunds in 2023 due to a lack of stimulus payments sent out last year.

The Internal Revenue Service released information encouraging taxpayers to take simple steps to file their 2022 federal tax returns. The organization said taxpayers will not receive an additional stimulus payment with the 2023 tax refund because there were no Economic Impact Payments for 2022.

PARENTS COULD SEE $300 MONTHLY PAYMENTS UNDER PROPOSAL FROM DEMOCRATS SEEK TO PASS IN DECEMBER

The 2023 tax refund is based upon a person’s taxable income calculated by subtracting itemized deductions from gross income.

“As taxpayers gather tax records, they should remember that most income is taxable,” the IRS said. “This includes unemployment income, refund interest, and income from the gig economy and digital assets.”

The IRS warned taxpayers not to plan on receiving their tax refunds by a certain date, “especially when making major purchases or paying bills,” as some returns may require additional review.

Tax returns claiming the Earned Income Tax Credit or Additional Child Tax Credit cannot be issued until February, the IRS said.

“The law requires the IRS to hold the entire refund — not just the portion associated with EITC or ACTC,” the IRS stated. “This law helps ensure taxpayers receive the refund they’re due by giving the IRS time to detect and prevent fraud.”

CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER

Some taxpayers are still waiting on their tax returns from last year or 2021 refunds to process. As of November, the IRS still had 3.7 million unprocessed individual tax returns received this year, with 1.7 million returns requiring error correction or special handling and 2 million paper returns waiting to be received and processed.

Standard deductions for both 2022 and 2023 taxes will be higher after the IRS raised them to account for high inflation, meaning that the dollar amount taxpayers can hang on to will increase for many.