Why is my 2022 tax refund smaller than last year?

As tax season rolls around, many people are realizing that their tax refunds are smaller than they were last year. While there are many factors that can impact the size of your refund, one major reason why tax refunds are smaller this year is due to tax credits changing back to pre-pandemic figures.

During the pandemic, the federal government passed several stimulus bills that included changes to tax credits, such as the Child Tax Credit and the Earned Income Tax Credit. These changes were designed to provide relief to families and individuals who were struggling financially due to the pandemic.

However, these changes were only temporary, and many of them have expired. As a result, tax refunds this year are smaller because people are receiving less money from these credits than they did last year.

For example, the Child Tax Credit was increased from $2,000 to $3,000 (or $3,600 for children under age six) for the 2021 tax year. However, this increase was only temporary. This means that if you received the higher credit last year, your tax refund will be smaller than last year because you won’t be getting that extra money from the credit.

Similarly, the Earned Income Tax Credit was expanded for the 2021 tax year, but these changes are also temporary. If you received a larger credit last year due to these changes, your tax refund will be smaller this year because you won’t be getting that extra money from the credit.

It’s important to note that while tax refunds may be smaller this year, it doesn’t necessarily mean that you owe more in taxes. In fact, many people may actually owe less in taxes this year due to changes in tax rates and other factors.

If you’re disappointed by your smaller tax refund this year, there are a few things you can do to help increase it. For example, you can make sure you’re claiming all the deductions and credits you’re eligible for, and you can adjust your withholding to have more money taken out of your paycheck throughout the year.

In conclusion, tax refunds are smaller this year due to tax credits changing back to pre-pandemic figures. While this may be disappointing for some, it’s important to remember that these changes were only temporary and were designed to provide relief during a difficult time. By taking steps to maximize your deductions and credits, you can still make the most of your tax return this year.