If you’re banking on a tax refund, it may be smaller, or you may owe money this season, according to financial experts.
Typically, you get a federal tax refund when you’ve paid or withheld more than the amount you owe, based on taxable income.
The IRS subtracts the greater of the standard or itemized deductions from adjusted gross income to reach taxable income, and there are a few reasons why it may be higher in 2021.
“Working families are not expecting this,” said Tommy Lucus, a certified financial planner and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida. “And it’s going to be a shock to them.”
For example, if you qualified for a $3,000 tax credit and received payments for $1,500 in advance, you will claim the $1,500 balance when filing a tax return.
