CNBC: “Tax ‘refunds may be smaller in 2023,’ warns IRS. Here’s why”
CNBC, December 1, 2022 — “If you’re expecting a tax refund in 2023, it may be smaller than this year’s payment, according to the IRS,” writes Kate Dore, CFP® in today’s article on CNBC. “Typically, you get a federal refund when you’ve overpaid yearly taxes or withheld more than the amount you owe.”
Kate explains: “Your annual balance is based on taxable income, calculated by subtracting the greater of the standard or itemized deductions from adjusted gross income. Taxpayers will not receive an additional stimulus payment with a 2023 tax refund because there were no economic impact payments for 2022.”
She turned to Marguerita Cheng, CFP® Pro, for additional insights.
“Deductions for charitable donations in 2022 are not as robust as 2021,” said Marguerita, CEO of Blue Ocean Global Wealth in Gaithersburg, Maryland. “In response to the Covid-19 pandemic, Congress gave charities a boost in 2020 by offering a tax incentive for cash gifts, and lawmakers extended the tax break for 2021.”
She added, “With a higher standard deduction since 2018, it’s become more difficult to itemize deductions, including the tax break for charitable gifts. Filers choose either the standard deduction or itemized deductions, whichever is greater. But for 2021, you could claim up to $300 for cash donations or $600 for married couples filing together, regardless of whether you itemize. The tax break was not extended for 2022, however, meaning there’s no longer a benefit for charitable gifts if you take the standard deduction.”