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Don’t count on that tax refund yet. Why it may be smaller this year

admin by admin
January 4, 2022
in Tax
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Don’t count on that tax refund yet. Why it may be smaller this year

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.

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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.

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