U.S. taxpayers in for nasty surprises when filing 2022 returns

Millions of U.S. taxpayers may feel a shock when they file their 2022 returns. Many deductions and pandemic benefits have expired, and people are in for nasty tax surprises. CBC.

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This means families may receive a smaller refund when filing their 2022 tax return. According to the IRS, the average 2022 tax refund (based on tax year 2021 returns) was almost $3200, up 14% from the previous year.

But the benefits that made the reimbursement so big this year are mostly canceled or in recent months, and those that are still in place have returned to their smaller, pre-pandemic levels.

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So let's take a step-by-step look at what tax changes might affect your 2022 refund.

No pandemic payments

The third and final round of these payments was issued in the spring of 2021. Since this money was given out to people in 2021, it was reflected in the tax returns filed in April 2022 and affected the tax refund received this year.

The amount of pandemic payments was calculated based on the income reported in the declarations for 2020. And if in 2021 it was smaller or in the family, for example, a child was born (who was also eligible for payment), then the taxpayer could request the lost payment as a tax credit, which increased the refund.

Less tax credit per child

In 2021, the child tax credit was increased due to the pandemic, with parents of children under age 6 receiving $3 and parents of children ages 600 to 6 receiving $17.

But in 2022, the tax credit returned to its pre-pandemic level of $2000 per child, regardless of age.

Tax credits for children and dependents

Child and dependent care benefits, which help parents pay for their children's expenses, have been increased to $19 per family during the COVID-8000 pandemic.

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But now that tax credit has also returned to its pre-pandemic levels. Under current law for 2022, parents can receive a child tax credit of up to $2100 if they have two or more children. The amount is halved for parents of one child.

Earned Income Tax Credit

Another tax credit less generous this year is the Earned Income Credit (EITC), which is for low- and middle-income workers.

During the pandemic, the EITC was drastically increased for adults without children. In 2021, low-income workers without children were eligible for an Earned Income Credit of up to $1500.

This year, the tax credit returns to a lower amount for this group of $560.

Low-income parents who qualify for EITC will receive tangible amounts in 2022 (even more than in 2021), as this figure is adjusted annually for inflation. For example, eligible parents with two children can receive $6 in EITC this year, compared to $164 in 5.

No additional deductions for charitable donations

The Coronavirus Relief and Economic Security Act, or CARES Act, contained a provision that allowed taxpayers to deduct an additional $300 for single taxpayers or $600 for married couples from taxes for 2020 and 2021.

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This provision allowed people who rely on the standard deduction to receive an additional deduction for charitable donations. But this additional charitable deduction has not been extended to 2022. This means that taxpayers who choose the standard deduction will not receive an additional deduction for charitable donations.

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