Why is my tax return so high
IRS Issues Warning - Smaller Tax Refunds This Year - Here's Why...
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the IRS issued a warning about smaller
tax refunds for this upcoming tax season
so my name is Brian Kim I'm a certified
public accountants and what the IRS is
saying is true
therefore I hope that you're prepared in
terms of your expectations
of how big your tax refund is going to
be this year so I'm going to tell you
why this is happening
according to the IRS the average tax
refund is expected to fall by 20 percent
compared to last year
the reason is because so many of the
pandemic related tax breaks they expired
on December 31st of 2021.
so basically they've been eliminated for
2022. I'm going to tell you about the
four bigger ones and then after that I'm
going to tell you what you can do right
now to maximize your tax refund so let's
begin
reason number one of four and this is a
smaller one it's a charitable donation
deduction
last year you could claim a tax
deduction of up to three hundred dollars
for charitable donations it was six
hundred dollars if you were filing
married filing jointly
you could claim this tax deduction even
if you were using the standard deduction
and 90 of Americans use the standard
deduction on their tax return
this means that this benefit is going to
be gone for 90 percent of people
but again this is peanuts compared to
the ones coming up
reason number two of four it's the tax
credit for child care expenses
this has been reduced dramatically
so in a nutshell you get a tax credit
for child care expenses like daycare
in 2021 the tax credit was up to eight
thousand dollars in 2022 it has been
reduced to a maximum of two thousand one
hundred dollars which is
obviously a huge difference
so I already know that this change is
going to be a big surprise to so many of
the parents that are unaware of this
change so just a heads up
reason number three of four the child
tax credit
the one that I just talked about that
was for child care expenses like daycare
expenses this one it's the child tax
credit this is a tax credit that you get
for just for just having qualifying
children
this tax credit has also been reduced in
2021 the child tax credit was three
thousand dollars for having children
ages 6 to 17. it was three thousand six
hundred dollars for having children
under the age of six
for 2022 it has now fallen to two
thousand dollars
and we're talking about per child so
this one can make a big difference
depending on how many children that you
have
and the last one reason number four is
the Earned Income Tax Credit so this one
is going to impact people without
children
in 2021 the rules were helpful to adults
without qualifying children but those
beneficial rules have now expired in
2021 low-income workers without children
were eligible to receive a tax credit up
to one thousand five hundred dollars in
2022 it's been reduced to a maximum of
560 dollars
okay so I want to say this for this
earned income tax credit if you have
qualifying children then you're going to
be fine because the rules are actually a
little bit better compared to last year
if you have qualified children the max
the maximum tax credit for this one it
has actually gone up from six thousand
seven hundred twenty eight dollars in
2021 to
6935 in 2022.
for adults with qualifying children
they basically adjusted the tax credit
upwards for inflation so basically if
you have qualified children and you
don't have to you don't have to worry
about this one if you don't have
qualified children then the benefit has
been reduced significantly
and I want to give you a heads up about
this because this is what the IRS is
saying this is about the whole 600
situation with the 1099k
if you received 600 or more from a third
party provider we're talking about like
PayPal or from venmo
for the sale of goods or services the
IRS said and I quote some tax returns
may require additional review and may
take longer to process
therefore this whole 600 situation with
a 1099k it may delay your tax refund
especially if you're not reporting it
correctly
so I mean this is just a warning to
watch out do not overlook this if this
is applicable to you otherwise it will
slow down your tax refunds
now with that being said I'm telling you
there's going to be so many people that
are going to be in shock or just utter
disbelief about how badly their tax
refund decrease this year compared to
last year
so I just want you to know that I want
you to manage your expectations walking
into this tax filing season
because I already know what's going to
happen for people that do their taxes
themselves on Turbo Tax or any at home
software
when you get your results back a lot of
people are going to say wow this is so
different from last year this is so much
less than I thought it would be I think
I may have done something wrong
so I would say yes please double check
your work however if you find that you
did nothing wrong and your your refund
is so much smaller that's because the
rules for these bigger ticket items
they've changed dramatically compared to
last year so don't go blaming yourself
don't go blaming the software either
additionally if you have someone else
doing your taxes let's just say a CPA or
a h r block or whoever it may be
yes I encourage you to double check
their work but if you don't if you don't
see anything wrong like if they did
everything correctly then yes the the
results are coming back worse because of
these rule changes so keep that in mind
before before getting hostile with your
tax preparer
to all the tax preparers that are
watching this I'm doing you a huge favor
for managing your clients expectations
so hopefully you don't get too many
Furious reactions or people blowing up
at you so in appreciation if you could
give this video a thumbs up I'd
appreciate it back
and I want to give you these helpful
tips and reminders to help you maximize
your tax refund and if some of the
deadlines are pushed back by a few days
it's because they either fall on the
deadline falls on a weekend or on a
holiday
if you want to put money into your 401k
403 B's or the 529 plan you have until
December 31st for IRAs and hsas the
deadline is April 18 2023 for any 2022
contributions
so make sure you take out your rmds by
December 31st if you have retirement
accounts that apply so you don't want to
get penalized on those
if you have some stocks that are at a
loss you can sell them by December 31st
and use those losses as a tax deduction
so your stock losses are valuable
because they act as a tax deduction
so ultimately you can sell off your
losers to offset against your winners so
by doing so you're going to end up
paying less in taxes
if you have more losses than gains you
can use up to three thousand dollars of
your stock losses as a tax deduction
against any other income which will
reduce your taxes
if you have more than three thousand
dollars of net losses your remaining
losses will carry forward to next year
they just build up until you use them
so this whole process is called tax loss
harvesting
you're selling off your losing positions
in order to lower your taxable income so
that's all that's happening it's nothing
fancy
so just make sure that you do not re-buy
the same stock within 30 days of selling
it otherwise you cannot claim it as a
deduction for this year that's called
The Wash sale rule
if you have crypto losses you can close
your losing positions and claim the tax
benefit as well
for small business owners and the
self-employed so I'm talking to the
single member llc's sole Proprietors s
Corps independent contractors just a
reminder please accelerate your expenses
so get those expenses prepaid and just
Jam those deductions into 2022. so this
is considered best practice because of
the time value of money and that's very
precious right now because interest
rates are so high
and don't forget about your estimated
tax payments your last install that's
due January 17th
and I want to mention this about
stimulus checks so if you didn't get
your stimulus check money for last year
so I'm talking about 2021
you cannot correct that situation on
your upcoming tax return you need to
either file a 2021 tax return because
you didn't file one or you need to file
an amendment for your 2021 tax return
so get that done because you have three
years to resolve that otherwise you're
going to Forfeit over your tax refund
money to the IRS they don't play around
the IRS is going to be more than happy
to keep your money
so this video was about 2022 taxes the
ones that you're going to be filing very
soon in the upcoming weeks and months
ahead
we will cover tax rule changes for 2023
in a separate video so please be sure to
subscribe
if there are other tax items that you
would like to see addressed or for other
people to know then please take
advantage of the comments down below I
hope that this was helpful and a good
reminder please subscribe and I wish you
a very nice day take care