IRS is accepting tax returns starting Monday, and experts are warning of potential disappointment as some of the large deductions parents relied on last year have expired. Last year, parents could claim up to $3,600 per child and up to $8,000 for dependent care expenses such as child care, but now the maximum for dependent care is $2,100, and the child tax credit is now $2,000 instead of $3,600.
Even though these reductions may cause a smaller refund, experts are reminding taxpayers that these changes are returning to pre-pandemic levels and that to get a sense of what to expect, it is best to look at your 2019 return, not last year.
Filing early also has its benefits; it reduces the risk of identity theft, as last year, 1.4 million people reported they had been victims of identity theft and the majority being tax-related. Also, if you owe taxes, filing early gives you more time to pay the money, and if the government owes you money, you’ll get your refund faster.
The IRS has hired thousands of people to answer questions and process returns, and if you file electronically, the IRS says it should process your return within 21 days, and by February 28th if you get the earned income tax credit (EITC). The EITC is for low to moderate-income earners and has increased this year to account for inflation.
If you had any significant life events in 2022, such as getting married, divorced or claiming unemployment, experts recommend considering the help of a professional. According to the National Association of Accountants, the average fee for tax filing last year was $515. However, there are free filing options, such as the Free File Alliance, a collaboration between tax software companies and the IRS, which provides free e-filing services to taxpayers who earn less than $7,200 per year.
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