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Why your tax refund may be smaller next year

HOWEVER since the coronavirus pandemic began, the world has been full of surprises – and you can get another one if you’re expecting a tax refund.

When Americans pay their taxes every year – they hope a little economic stimulus that they can use to address short-term or long-term needs.

Average return in 2021 is $2,775 - but some could see lower returns next year

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Average return in 2021 is $2,775 – but some could see lower returns next year

In 2021, Americans received an average of $2,775 in tax refunds, up 11% from the previous year, according to the report. Internal Revenue Service.

It’s important to note that tax refunds are issued when you overpay, so this is technically you getting your money back.

But that’s not always the case for some Americans, who may owe money because they pay low taxes.

Specifically, there could be a number of reasons why you owe or cannot get such a large refund when you file in 2022 due to Washington’s policies and other moves this year.

We explain those possibilities below.

You did not opt ​​out of child tax credits

NS America’s Rescue Act, signed into law by the President Joe Biden in March, including a provision for expansion child tax credit up to $3,600 per child from $2,000.

Since July, payments have been made in monthly installments up to $300 per child, essentially an advance.

While the payments helped lift millions of children out of poverty – some may have to pay the IRS if they have a change in filing or an increase in income.

To qualify for the full payments, couples need to earn less than $150,000 and single parents applying as head of household need to earn less than $112,500.

If income exceeds those thresholds – then you could end up paying the IRS if you don’t opt out of payments.

In total, the IRS will issue child tax credit payments worth up to $1,800 to eligible families in 2021.

Then, on your 2021 tax return, you’ll be able to claim the other half of the payment if eligible.

No student loan deduction

For a while, those equipped with student debt No payments due to the suspension of outstanding loans.

However, this means that borrowers will not be allowed to deduct student loans as none will pay interest in 2021.

Student loan borrowers can typically deduct up to $2,500 of interest paid in federal taxes, according to the IRS.

And if you earn too much, the deduction will be phased out or no longer applied.

For single filers, that deduction begins to decline once your adjusted adjusted gross income (MAGI) reaches $70,000 and you can no longer claim it once the amount is reached. up to $85,000.

The elimination started with a MAGI of $140,000 for married couples and ended completely when it hit $170,000.

Another thing you’ll want to keep in mind is that student debt collection will resume in February.

This could affect you if you’re in default – meaning the government can withhold your tax refund and use it to help you repay your student loan obligations. Friend.

We explain how families with children under 13 can get surprise stimulus payment of $8,000.

We break down retailers that will pay your college tuition.

The IRS Reveals Why You Still Haven’t Received Your Tax Refund And It’s Affecting People $35 MILLION

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https://www.the-sun.com/money/4128410/tax-refund-less-2022/ Why your tax refund may be smaller next year

DevanCole

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