The 2020 tax season has come and gone, but the IRS is still dealing with the fallout. A new report from the General Accounting Office reveals that the agency made mistakes in refund amounts, sending out too much money to some recipients and not enough to others. The agency sent a total of $1.9 billion in advance payments prior to filing season last year—$2 billion more than planned—and about one-fifth of Americans will be affected by this mistake. If you think you were overpaid or underpaid because of your 2020 taxes, check with your accountant and file an amended return early!
This year, the IRS is sending out millions of checks to families who qualify for the Child Tax Credit and Recovery Rebate Credit. But these credits are both refundable tax credits, which means that if the amount you receive is higher than your tax liability, you’ll get a check back from the government. And it’s not just low-income taxpayers who can expect a refund; an estimated 92 million filers will file for at least one of these credits this year.
Stimulus Check To Fade Out
There are two types of refundable tax credits: The first type is called a “refundable” credit because even if a taxpayer owes no taxes at all (and thus doesn’t pay any), they will still be able to get money back from Uncle Sam through this kind of credit. The second type is called “nonrefundable” because only those with negative taxable income or zero taxable income will receive some sort of payment made by the U.S Treasury Department.”
If you got a larger refund than usual in 2020 and are hoping for the same thing in 2023, think again—the government is going to give back your money sooner than expected. The reason for this is simple: You were overpaid in 2020 due to the new tax law that went into effect at that time. Basically, some Americans will receive less of a refund in 2023 because they were overpaid in 2020, while others will get a larger refund than they normally would have because they were underpaid. In other words, if you think your taxes may be different this year compared with previous years (or if it seems like everyone else is saying they’re getting more or less back), check with an accountant or use TurboTax (which offers free filing) before filing to make sure everything lines up correctly and avoid any unpleasant surprises.
