How to Navigate Tax Season

This tax season, filers have a few extra days to prepare and file their federal income tax returns. They’re due April 18 because April 15 lands on a weekend. The Emancipation Day holiday in Washington on Monday pushes Tax Day to April 18.

Filers who took advantage of extra pandemic-related tax breaks will see smaller refunds for the 2022 tax year. Read on for what to expect.

CHANGES FOR THE 2022 TAX YEAR

This tax season, some of you may notice a smaller refund compared to last year.

Kedra Flowers, a North Texas-based CPA, explained some pandemic relief provisions are expiring.

“Every year there are changes, there’s legislation that expires, there’s new legislation that comes into play. The biggest thing, though, that we’ve experienced in the last few years is all the pandemic relief,” said Flowers.

Extra tax breaks available during the pandemic are reverting to pre-pandemic levels including the enhanced child tax credits available for the 2021 tax year. The enhanced credit offered up to $3,000 per qualifying child ages 6-17 and up to $3,600 per qualifying child under age six. The max credit drops back down to $2,000 per child under 17.

The child and dependent care credit which offers a tax break for expenses like day care maxes out at $2,100 for the 2022 tax year. That’s down from a credit of up to $8,000 in the pandemic.

“You can factor in, in many cases, for the average working family, a pretty significant decrease,” said Flowers.

The earned income tax credit for taxpayers with no children who received a $1,500 credit last year would see a $500 credit in the 2022 tax year, according to the IRS.

During the pandemic, taxpayers could take up to a $600 charitable donation tax deduction even if they took the standard deduction. Those above-the-line deductions aren’t allowed in the 2022 tax year.

Offsetting those changes, Flowers explains, tax brackets and an increased standard deduction are adjusted for inflation, “The amount of tax you might owe is going to decrease. So, these credits may not have as big of an impact, but they are going to be there. You’re going to feel them.”

STEPS TO AVOID REFUND DELAYS

When it comes to getting your hands on a refund you’re due, the IRS said there are steps you can take to help avoid delays. E-file your return, if you can.

“Paper is not the friend of the IRS. When you have to file something by paper, it slows down the process,” said Michael Devine, a spokesperson at the IRS.

Use direct deposit to receive your refund and check your return carefully for any mistakes. That means making sure you have all your W2s, 1099s and tax documents before filing.

If you have to amend a return you’ve already filed, that would require special processing at the IRS.

“If you make a mistake that’s significant, or if you forget to claim income, it could stop your tax return from being processed, which would delay any refund until you get a letter in the mail and respond to it,” said Devine.

The IRS also says it’s hiring more people. For those who use direct deposit and e-file a return with no errors, the IRS said it’s issuing refunds within three weeks.

HOW TO PREPARE YOUR TAXES FOR FREE

You may not have to pay for tax preparation services. There’s free help available for many people.

You may qualify for free in-person help preparing your tax return at a Volunteer Income Tax Assistance (VITA). VITA sites can help people who generally make $60,000 or less, people with disabilities and people who speak limited English.

There is also a Tax Counseling for the Elderly (TCE) program that offers free help preparing basic tax returns.

You can read up on the VITA and TCE programs here. Or, call the IRS helpline at 800-906-9887 to locate a VITA or TCE site near you. Keep in mind, many require an appointment.

If you’re comfortable preparing your taxes on tax software yourself, individuals or families earning around $73,000 or less can use free tax software through IRS free file.

If you made more in the 2022 tax year, you can still file your tax return for free by using IRS fillable forms. The forms help with some basic calculations, so the filer would have to do the math themselves.

HOW TO VET A TAX PREPARER

If you hire a tax preparer, the IRS offers tips to help you check out the person you’re hiring.

Never sign or e-sign a blank tax return. Look over any return someone has prepared for you to make sure the information is correct.

The IRS recommends avoiding anyone who bases their fees on a percentage of your refund. Be wary of a preparer who claims they can get you a much bigger refund than a competitor.

Flowers, a longtime CPA, explains available tax credits and tax breaks are set by law. If you have a basic return, she explains those credits are available whether you use software to prepare your own return or hire someone.

“No one’s doing you a favor. These are legislative provisions that are going to be available no matter what tax service you use,” said Flowers. “I wish more people understood that because those credits are there to help families, parents, children, and they’re going to be there. So, take advantage of some of the free file opportunities.”

Also, remember the IRS will never call or email you to demand payment.

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