MONEY MONDAY – Refund Shock?
This tax season, many taxpayers are going to experience what is being called “refund shock”. This is going to happen because of a couple of things:
First, there are no more recovery rebate credits that have been helping boost refunds for the past couple of years. This was the extra $600, $1,200, or $1,400 per person that is now gone.
And second, many of the tax credits have returned to their pre-pandemic levels. Examples of these are the child tax credit, earned income credit, and dependent care credit. The child tax credit was good for $3,600 per child but has gone back to $2,000 per child. The dependent care credit gave back up to $8,000 of dependent care expenses but has now gone back to a maximum of $1,221 this year.
All of this will play into a much lower refund or higher tax owed = “refund shock.” I would suggest starting to prepare your tax return early. You have until April 18th this year to file and pay the tax owed. Remember, an extension is an extension to file, NOT to pay.
If you have any questions, please message me or comment below.