2022 refund reduction?

[cooper173]

Hello,

I'm trying to pinpoint the cause of the decrease of our refund when comparing 2021 and 2022. I understand the pandemic tax breaks were no longer valid in 2022, but it seems strange to me that the decrease of our refund is so drastic. Our refund in 2021 was $1,900 but this year the TT software is calculating $311. 

In 2021, our taxable income was approximately $42,000. In 2022, it was approximately $59,000.

In 2022, I worked full time at the same job. However, my husband changed jobs last year. At his new job on his W-4, he chose "married filing separately" by mistake. We've always filed married filing jointly. Could his mistake have contributed to the drastic refund reduction?

My husband received a 1099-R for an IRA withdrawal he made in 2022 for $2,500, and the "taxable amount not determined" box was checked. He paid taxes at the time, so he really only received about $2,100.

We have no kids, and no other special tax situations.

Any guidance as to why our refund decreased so significantly will be appreciated!

Many thanks.

[MonikaK1 · Accepted solution]

If your taxable income increased by $17,000 for 2022 over 2021, you can expect your tax liability to be higher and your refund lower unless you increased your withholding.

For Federal income taxes, the tax rate brackets for 2022 are 10%, 12%, 22%, 24%, 32%, 35%, and 37%. To see how the tax brackets apply to you for this year and for a tool to determine your marginal (the highest part of your income) tax rate, see here.

Your spouse can ask his employer for a new W-4 form to correct the filing status, or you can have TurboTax prepare one. See here for more information.

This year, several tax credits have been lowered to amounts before the coronavirus pandemic—or eliminated entirely. This includes the Child Tax Credit, the Child and Dependent Care Credit, and more. Check if these changes are why your refund is lower.

Double-check your entries for income, taxes paid, and deductions to confirm they are correct. Compare the individual line items with last year's return as well, if applicable.

See this help article for more information.