BUFFALO, N.Y. — Monday marked the start of tax season as the IRS began accepting and processing the first of what is expected to be 168,000,000 individual tax returns.
Many people are going to see a difference in their refund," predicted Tim Eliason, a tax preparer at Getter Tax and Consulting Services in Hamburg.
Eliason says much of that will be due to a number of expanded tax credits offered as a response to the pandemic, but which are now expiring and returning to pre-pandemic rules.
These include the expanded child tax credit, the earned income credit, and the child and dependent care credit among others.
This is expected to particularly affect middle-income earners, especially with children.
"Their tax bill may increase just a little and the refundable portion of the credit may be decreased, "said Eliason. "It may differ on a case-by-case basis, but I think a lot of people are gonna see smaller refunds...because we are reverting back to those old tax laws that we were used to prior to 2021."
Meanwhile, as the government continues to push alternative energy, it's also sweetening the pot for the purchase of items such as electric vehicles.
However, there are many who may be surprised to know how limited the tax credits, which the government touts as being worth up to $7,500, may actually be.
"The stipulations that you qualify for are pretty narrow," said Eliason.
First, there are restrictions on which models are eligible and a manufacturing limit applies, meaning the credit for some vehicles is reduced or unavailable.
As well, a filer may find limitations regarding the amount of the credit, and the credit is non-refundable, so you won’t get a refund for the unused portion of it. In addition, you can’t carry the credit over to your next year’s return.
But when it comes to credits for energy improvements for your home, Eliason says those may be more worth paying attention to for more people.
"And that could be things like windows, doors, insulation. And it used to be that over your lifetime you could get up to $500 for a credit. But for January 1, 2023, going forward, that's now a $1,200 annual credit, so that means every year you could qualify for $1,200 going forward."