Consumer Alert: Tax season is here! Here’s why your refund will likely be smaller this year
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ROCHESTER, N.Y. – Monday is the first day the IRS is accepting your tax return. And I want to prepare you for possible refund rage! That’s because some of the huge deductions parents relied on last year have expired. I’m not going to lie. This will likely hurt.
Last year, parents could get up to $3,600 per kiddo and up to $8,000 for dependent care expenses like child care. According to the Daycare Council of New York, the average cost of daycare is about $18,330 per year for children under 5. So that $8,000 per family was a big help.
Now the maximum for dependent care is $2,100, half of that if you have just one child. And instead of a maximum of $3,600 for the child tax credit, it’s now $2,000. But don’t be rankled by your smaller refund. We’re just returning to pre-pandemic levels. So if you’re trying to get a sense of what your refund will be, it’s best to look at your 2019 return, not last year.
And it pays to file early. First, you reduce the risk of identity theft. Last year, 1.4 million people reported they had been victims if identity theft, and according to the FTC, the majority are tax-related. All a thief needs is your social security number and they can file a return in your name and pocket the refund. If you owe taxes, filing early gives you have more time to pay the money. The money isn’t due until the April 18th even if you file far earlier. And if the government owes you money, you’ll get your refund faster. Remember last year it took months for some folks to get their refunds.
The IRS says it has hired thousands of people to answer your questions and process returns. 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. The earned income tax credit for parents is one of a few credits that has increased this year because it accounts for inflation. The EITC is for low to moderate income earners. In short, to qualify, you must have a social security number and an earned income that’s less than $59,187. The maximum tax credit is $6,935 dollars. That’s an increase of about $200.
It’s important to note that if you had any big life events in 2022, like getting married, divorced or claiming unemployment, the experts at Bankrate say you should consider the help of a professional.
According to the National Association of Accountants, the average fee for tax filing last year was $515. But there are some free filing options. The Free File Alliance is a collaboration with tax software companies and the IRS. It provides free e-filing services to taxpayers who earn less than $7,200 per year.
To get free in-person help, volunteers with Cash Rochester will be at the Bauch and Lomb building of the Central Library starting tomorrow. But you have to make an appointment. Call (585) 900-1004 to leave a voicemail or book an appointment online.