This is why you may see a smaller tax refund in 2023, and what you can do to prepare.
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Consumers, already being squeezed by the highest inflation in a generation and facing a possible recession, may not even have a fat tax refund to look forward to in 2023. That’s why it’ll be important to pay even closer attention to your return to ensure you get the tax refund you can, accountants say.
The IRS warned on Tuesday that tax refunds may be smaller because there were no stimulus payments in 2022. Additionally, it noted a pandemic-era exception in 2020 and 2021 that allowed those taking the standard deduction to claim a tax deduction of up to $300 for cash donations to charity hasn’t been extended. The only way, again, to write off gifts to charity is to itemize.
That can be alarming to millions of Americans who rely on tax refunds for large purchases, savings, investments or paying off debt. In 2022, 46% of taxpayers said they were relying on their refunds to do some of those things, a LendingTree survey showed.
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