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.
There are other events unrelated to the pandemic that may reduce your refund, including:
- Starting an additional job (especially self-employment)
- Getting a significant raise, but your W-4 staying the same
- Adjusting your withholding to maximize your take home pay
- Selling stock, crypto, or other investments
- Filing status changed
- Receiving unemployment benefits, but not having taxes withheld
- Taking an early withdrawal from your retirement account
- Having a child turn 17 in 2022, now receiving the Credit for Other Dependents instead of the Child Tax Credit
- Started receiving Social Security benefits or Roth IRA distributions
- Paying off your mortgage, so you can no longer deduct mortgage interest
- Paying off your student loan, so you can no longer deduct the interest
- Finishing school, so no longer eligible for certain education credits
- Earning little or no income and not qualifying for the Earned Income Credit
If your refund is wildly off, double-check the amounts you entered. A typo of just one dollar can have a big impact on your refund.
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