DENVER — Financial experts are warning taxpayers to expect a smaller refund this year as several pandemic-related tax credits decrease or end.
“The biggest changes that people will see is under the American Rescue Plan... a lot of relief and provisions were expanded. Those are either reverting or going away. So for instance, that child tax credit that increased up to $3,600, that's going back to pre- American Rescue Plan to $1,000. The child and dependent care credit that increased up to $8,000 for two or more kids, that's going back to $2,100,” said Lisa Greene-Lewis, a certified public accountant (CPA) with TurboTax.
Greene-Lewis said the non-cash charitable contribution of up to $300 that most taxpayers could claim is also going away.
“Make sure you have all your receipts together that are worth deduction. So no matter what stage you are in your life, so if you're a parent taking your child to daycare, that's worth that credit,” she said.
“Another thing that is impacting the refunds is the daycare credit. The daycare credit was as high as 50% last year, and it is now dropped to as low as 20%,” said Carlos Castro, an agent with SmarTax & Accounting, Inc.
Taking a closer look at Colorado, Castro says there is some good news for parents.
“The state has actually added their own version of the child tax credit, which is 10% of the federal tax credit. So it's not huge, but you know, it's an unexpected surprise this year on your Colorado return,” he said.
Castro says after preparing returns for several local families, every dollar counts.
“For 2021 tax year, we saw many families getting refunds in the high thousands, and this year, they would be less than half of that, even if the financial situation was exactly the same,” Castro said.
Both Castro and Greene-Lewis say taxpayers should file as soon as possible.
“The IRS is stating that they will issue nine out of ten tax refunds within 21 days or less of acceptance,” Greene-Lewis said.
The deadline to file taxes this year is April 18.
