Stimulus Update: You Need to Read This IRS Warning About Stimulus Checks

This post may contain affiliate links which may compensate us based on your interaction. Please read the disclosures for more information.

Before you file your taxes, you need to read this IRS warning 

On Jan. 23, 2023, the IRS issued a news release announcing the start of the tax-filing season. This is the tax-filing season that is taking place from January to April 2023, and it is for your 2022 taxes. You’ll submit your information about the income you earned last year and, in some cases, will receive a refund (or in other cases, you may owe taxes).

In its news release, the IRS had an important warning about the impact of stimulus checks on the tax return you’ll file this year. Specifically, the IRS made clear that because there were no stimulus payments last year on the federal level, you could find yourself with a smaller tax refund than you might expect.

Since many people count on their tax refunds to help them pay down debt, bulk up their bank accounts, or accomplish other important financial goals, it is important to read and understand this IRS warning so you are not caught off guard.

Here’s what the IRS had to say about stimulus checks

According to the IRS news release, there are two big reasons why your tax refund may be smaller this year than it was during the last tax-filing season.

“Due to tax law changes such as the elimination of the Advance Child Tax Credit and no Recovery Rebate Credit this year to claim pandemic-related stimulus payments, many taxpayers may find their refunds somewhat lower this year,” the IRS news release read.

The Recovery Rebate Credit was the $1,400 check authorized by the American Rescue Plan Act. The American Rescue Plan Act also expanded the Child Tax Credit, offering parents $3,600 for children under age 6 and offering $3,000 for parents of children aged 6 to 17. These amounts were per child.

Together, these two stimulus payments resulted in millions of Americans getting thousands of dollars in extra tax credits when they filed their 2021 tax returns in 2022. But, if you got used to having that big refund coming because of the stimulus checks, you are likely to be very disappointed this year when you receive much less money from the IRS since neither of these stimulus check programs was renewed in 2022.

What to do if your tax refund is a disappointment

If you were anticipating a larger refund than you get, it can be hard to cope with the financial consequences — especially if you earmarked the money for something important.

The good news is, you can find other ways to bring in extra cash for your financial goals. Some states are still planning to send out stimulus payments in the coming months and you may receive a payment depending on where you live. There are also lots of opportunities to pick up a side hustle to bring in supplementary funds.

The important thing is to heed the IRS warning, be aware your refund may be for less than you’d hoped for, and make other plans to make up for this shortfall if you were counting on the cash coming in.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2024

If you’re using the wrong credit or debit card, it could be costing you serious money. Our expert loves this top pick, which features a 0% intro APR until 2024, an insane cash back rate of up to 5%, and all somehow for no annual fee.

In fact, this card is so good that our expert even uses it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

 Read More