Is your Refund Smaller This Year?
This week in the tax office we have had a lot of discussions about the change in Federal Refunds compared to last year. What no one has noticed is the federal withholding in 2022 was a little lower than in previous years. The IRS is no longer over withholding and so although it was a small difference, over time it added up, and as a result clients are noting less of a refund this year. The other changes that have to be taken in consideration is that the federal government had a 3-year tax plan beginning in 2020 that would progressively increase your tax liability. 2022 is the third year of that change. Something to note is that this will be what your taxes look like for the foreseeable future. There is not a lot you can do these days to reduce that liability. Residential real estate rentals, some air BnB rentals, and definitely small businesses can help, but they need to be legitimate and for some they will not be possible. Staying aware of your own tax liabilities can give you peace of mind and sometimes that is all you need.