We are a week away from the start of tax season and there are changes that may determine whether you receive or owe more or less this year.
Because of inflation, the IRS increased the standard deduction from $12,550 to $12,950 for individuals. So if everything in your life stayed the same, you may be getting more money back.
But if you received thousands of dollars in child tax credits last year, you will be getting less this year. It’s now $2,000 per dependent instead of $3,600.
You also can no longer claim $600 in charitable deductions if you use the standard deduction.
Certified Public Accountant Robert Hockensmith says you’re better off finding that sweet spot in your paycheck so that how much you owe or how much you get back is as close to zero as possible.
“If you’re looking at your refund as a savings account, you’re losing money because you receive no interest on it, no dividend, no capital gains. You got nothing but that money back,” Hockensmith said. “Inflation is eating into that refund. So yeah, you get a $3,000 refund or $2,000 or whatever it is but you can't buy as much with that money as you used to be able to because inflation has gone up.”
Your job has until the end of the month to send you your W2, but you can start filing on January 23.
