2022 Tax Return vs. 2023 Tax Return

[bg5]

Wow....what a difference a year makes

My 2022 federal tax [refund] was $3084

My 2023 federal tax [refund] was $654

What about you????

OP has corrected the above in subsequent posts, this edit corrects his original post.

Moderator Pops1860

[02nz]

Do you mean the refund amount? The tax "return" is the form itself, nothing to do with whether you still need to pay tax or get a refund.

Also, so many different variables involved that comparisons of refund amounts are almost entirely meaningless. If you're trying to figure out why you're getting back less this year, then you need to provide a lot more info.

[gatorking]

Congrats on giving the government a smaller interest free loan. (I assume these numbers are your refund.)
How does total tax paid compare?

[pizzy]

Wow....what a difference a year makes

My 2022 federal tax return was $3084

My 2023 federal tax return was $654

What about you????

You should be comparing your total tax liability (meaningful), not your refund amounts (meaningless).

[JoMoney]

Wow....what a difference a year makes

My 2022 federal tax return was $3084

My 2023 federal tax return was $654

What about you????

Are you stating that's what you underpaid and owe the IRS, or that's the refund you're getting because over-withheld ?
Since you put a happy face in there, I'm guessing it's a refund of the money you could have had throughout the year had your withholding been correct, and likely not a under-withholding which probably would have generated additional penalty.Are you asking for help in figuring out what your withholding should have been?

[livesoft]

I won't file my 2023 return until about October 2024.

Sorry, I'm bad!

[TwstdSista]

It always amazes me when people can do their taxes this early - I'm still waiting on six 1099 forms from 3 different banks/brokerages!

Glad you were able to get yours done early!

[White Coat Investor]

It always amazes me when people can do their taxes this early

Simplicity has its virtues. I'm with LiveSoft. I probably won't even meet with my accountant until the 2nd week of October. It's a rush just to figure out which states I will need to file extensions for.

[bg5]

Wow....what a difference a year makes

Here is the info below about my refund and I did change anything. Now I am happy that my return is minimal since I dont want the government borrowing my cash for free but I was surprised it was this big a difference.

My 2022 federal tax return was $3084

My 2023 federal tax return was $654

What about you????

[Murdock7591]

I will never understand why anyone would give the Federal Government a $3084 loan.

[samsoes]

Wow....what a difference a year makes

Here is the info below about my refund and I did change anything. Now I am happy that my return is minimal since I dont want the government borrowing my cash for free but I was surprised it was this big a difference.

My 2022 federal tax return was $3084

My 2023 federal tax return was $654

What about you????

One more time - refund?

[livesoft]

I will never understand why anyone would give the Federal Government a $3084 loan.

In 2022 that turned out well for those folks that would have invested the $3084 in the stock market OR a bond fund (that's a loan!).

Buying a Treasury note, bill, or bond is a loan to the Federal Government. Just sayin'!

[retiringwhen]

I will never understand why anyone would give the Federal Government a $3084 loan.

I gave gov't a much bigger one because I didn't know that 401K plan withdrawals have a mandatory 20% withholding rate.

I won't make that mistake again!

[bg5]

Wow....what a difference a year makes

My 2022 federal tax refund was $3084

My 2023 federal tax refund was $654

What about you????

[neilpilot]

Wow....what a difference a year makes

Here is the info below about my refund and I did change anything. Now I am happy that my return is minimal since I dont want the government borrowing my cash for free but I was surprised it was this big a difference.

My 2022 federal tax return was $3084

My 2023 federal tax return was $654

What about you????

One more time - refund?

That’s what OP says above. Do you question that? OTOH OP also says that he “did change anything “!

[HueyLD]

I gave gov't a much bigger one because I didn't know that 401K plan withdrawals have a mandatory 20% withholding rate.

I won't make that mistake again!

You can choose not to have federal income tax withheld if the distributions are not eligible rollover distributions.

“ Your retirement plan distributions are subject to federal income tax withholding. However, you can choose not to have tax withheld on payments you receive unless they are eligible rollover distributions. (These are distributions, described later under Rollovers, that are eligible for rollover treatment but aren't paid directly to another qualified retirement plan or to a traditional IRA.) If you choose not to have tax withheld or if you don't have enough tax withheld, you may have to make estimated tax payments.”

https://www.irs.gov/publications/p575#e ... 1000226745

[retiringwhen]

I gave gov't a much bigger one because I didn't know that 401K plan withdrawals have a mandatory 20% withholding rate.

I won't make that mistake again!

You can choose not to have federal income tax withheld if the distributions are not eligible rollover distributions.

“ Your retirement plan distributions are subject to federal income tax withholding. However, you can choose not to have tax withheld on payments you receive unless they are eligible rollover distributions. (These are distributions, described later under Rollovers, that are eligible for rollover treatment but aren't paid directly to another qualified retirement plan or to a traditional IRA.) If you choose not to have tax withheld or if you don't have enough tax withheld, you may have to make estimated tax payments.”

https://www.irs.gov/publications/p575#e ... 1000226745

Not at my MegCorp's 401K, it is 20% or you don't take the distribution, at least for in-service over 59.5 withdrawals. Maybe once I retire fully, I may be able to set my own rate, I can't test that yet.

The plan can do what they do, which btw, the plan administrator is Vanguard, the plan sponsor is a standard MegaCorp.

[exodusing]

I'm getting a refund because I was paying estimated taxes at the safe harbor rate (2021 taxes), 2021 there were large capital gains distributions on some of the bond funds I hold in taxable and 2022 there were no such capital gains distributions, so taxes are much lower.

While I'm missing some 1099s, they are for mutual funds and I know how much the funds distributed in 2022, so it's easy to estimate taxes. I used this information to adjust fourth quarter estimated taxes, due January 17, otherwise I'd have paid too much by a much larger margin. I didn't have the necessary information until after paying the September estimated tax installment.

[bg5]

Thanks for all the replies....the reason I made this post is I did not make any changes from 2022 to 2023 so I am trying to figure out why there is such a difference. I am wondering because of the tax credits of covid for my 3 kids possibly?

The only major change in our household is our income went up about $8000 in total so maybe thats it?

[SmileyFace]

I will never understand why anyone would give the Federal Government a $3084 loan.

Not everyone has a predictable income stream.

[atdharris]

I paid $200 in 2022. In 2023, my estimated refund is ~$4100 between federal and state. Most of that is because my annual bonus was taxed at the 37% level when I am only in the 24% bracket.

[Gryphon]

Thanks for all the replies....the reason I made this post is I did not make any changes from 2022 to 2023 so I am trying to figure out why there is such a difference. I am wondering because of the tax credits of covid for my 3 kids possibly?

The only major change in our household is our income went up about $8000 in total so maybe thats it?

If your income went up then perhaps your tax withholdings also went up?

[Hyperchicken]

Thanks for all the replies....the reason I made this post is I did not make any changes from 2022 to 2023 so I am trying to figure out why there is such a difference. I am wondering because of the tax credits of covid for my 3 kids possibly?

The only major change in our household is our income went up about $8000 in total so maybe thats it?

Compare your tax returns line by line and see where the numbers diverge.

[TwstdSista]

Thanks for all the replies....the reason I made this post is I did not make any changes from 2022 to 2023 so I am trying to figure out why there is such a difference. I am wondering because of the tax credits of covid for my 3 kids possibly?

The only major change in our household is our income went up about $8000 in total so maybe thats it?

That would make sense - especially if that income was in the 32% tax bracket.

[HueyLD]

I gave gov't a much bigger one because I didn't know that 401K plan withdrawals have a mandatory 20% withholding rate.

I won't make that mistake again!

You can choose not to have federal income tax withheld if the distributions are not eligible rollover distributions.

“ Your retirement plan distributions are subject to federal income tax withholding. However, you can choose not to have tax withheld on payments you receive unless they are eligible rollover distributions. (These are distributions, described later under Rollovers, that are eligible for rollover treatment but aren't paid directly to another qualified retirement plan or to a traditional IRA.) If you choose not to have tax withheld or if you don't have enough tax withheld, you may have to make estimated tax payments.”

https://www.irs.gov/publications/p575#e ... 1000226745

Not at my MegCorp's 401K, it is 20% or you don't take the distribution, at least for in-service over 59.5 withdrawals. Maybe once I retire fully, I may be able to set my own rate, I can't test that yet.

The plan can do what they do, which btw, the plan administrator is Vanguard, the plan sponsor is a standard MegaCorp.

I think you did not read the key phrase of “eligible rollover distributions.

Distributions that can be rolled over are called "eligible rollover distributions." And the following distributions cannot be rolled over and thus are eligible for zero tax withholding.

“ Retirement plans: You can roll over all or part of any distribution of your retirement plan account except:

Required minimum distributions,

Loans treated as a distribution,

Hardship distributions,

Distributions of excess contributions and related earnings,

A distribution that is one of a series of substantially equal payments,

Withdrawals electing out of automatic contribution arrangements,

Distributions to pay for accident, health or life insurance,

Dividends on employer securities, or

S corporation allocations treated as deemed distributions.”

https://www.irs.gov/retirement-plans/pl ... tributions

[djmbob]

Same here.

My taxable military retirement income only went by the COLA, just about everything else stayed the same in terms of income from the year before. W/H rates stayed the same at Married/0.

After starting to enter info into, showing a big deficit, I made two $600 tax payments in Dec and Jan.

News articles saying people would be in for a shock this year are spot on.

Cheers,
Ray

[8301]

It always amazes me when people can do their taxes this early - I'm still waiting on six 1099 forms from 3 different banks/brokerages!

Glad you were able to get yours done early!

When is the earliest date when all the tax forms/info are available for tax filing for typical taxpayers?

[Gryphon]

It always amazes me when people can do their taxes this early - I'm still waiting on six 1099 forms from 3 different banks/brokerages!

I always wait until I have the 1099s before filing but I have a really good idea what's going to be on them before they arrive - I can usually do an early version of my taxes at the beginning of January and get pretty close to the final result.

[OpenMinded1]

I will never understand why anyone would give the Federal Government a $3084 loan.

Not everyone has a predictable income stream.

+1

[invest4]

I will never understand why anyone would give the Federal Government a $3084 loan.

I also agree it doesn't make sense...but the mind is a funny thing!

For some people:

* It's essentially forced savings they would otherwise likely spend

* Feels like free money when they get it and gives them a high

* Until more recently, depending upon what they were doing with that money (besides spending it)...they didn't miss out on much (low interest rates).

[ray.james]

It always amazes me when people can do their taxes this early

Simplicity has its virtues. I'm with LiveSoft. I probably won't even meet with my accountant until the 2nd week of October. It's a rush just to figure out which states I will need to file extensions for.

I can understand end of feb or April buy why wait until October?

[Katietsu]

Thanks for all the replies....the reason I made this post is I did not make any changes from 2022 to 2023 so I am trying to figure out why there is such a difference. I am wondering because of the tax credits of covid for my 3 kids possibly?

The only major change in our household is our income went up about $8000 in total so maybe thats it?

The child tax credit in 2022 is a maximum of $2000 per child. The child tax credit in 2021 was $3000 or $3600 per child, depending on their age. Not to mention that 17 years olds were eligible in 2021 but not 2022.

Even if you received advanced child tax credit payments, you were only paid part of the credit increase. This is going to be a big change. I suspect most people with minor children will be asking the same question.

There were other Covid era benefits that also reverted to prior tax law that could have reduced your refund. And the higher income might have as well, especially if any of it was from sources that did not withhold. So, those with cash type savings who were receiving near 0% interest in 2021, might have some tax generating interest in 2022 with no increase in withholding.

[retiredjg]

Thanks for all the replies....the reason I made this post is I did not make any changes from 2022 to 2023 so I am trying to figure out why there is such a difference. I am wondering because of the tax credits of covid for my 3 kids possibly?

The only major change in our household is our income went up about $8000 in total so maybe thats it?

I think the child tax credits are a likely cause.

https://www.irs.gov/newsroom/get-ready- ... ng-in-2023


"Some tax credits return to 2019 levels. This means that affected taxpayers will likely receive a significantly smaller refund compared with the previous tax year. Changes include amounts for the Child Tax Credit (CTC), Earned Income Tax Credit (EITC) and Child and Dependent Care Credit.

Those who got $3,600 per dependent in 2021 for the CTC will, if eligible, get $2,000 for the 2022 tax year.
For the EITC, eligible taxpayers with no children who received roughly $1,500 in 2021 will now get $500 in 2022.
The Child and Dependent Care Credit returns to a maximum of $2,100 in 2022 instead of $8,000 in 2021."

[RickBoglehead]

As several have pointed out, comparing refunds is meaningless. Lay returns side by side and it should be obvious what changed.

[vested1]

I will never understand why anyone would give the Federal Government a $3084 loan.

Not everyone has a predictable income stream.

+1

+2
I don't mind paying 5% too much in order to avoid being required to pay estimated taxes every quarter. In fact I do so intentionally to ward off any surprises.

That being said, I'm batting 1000 lately having my taxes done by "professionals" in our new location. Last year (2021 taxes) the owner of the tax prep company who has been in business for 20 years said I owed 27k in capital gains, which I didn't, and had to prove it to her.

This year (filed yesterday) we went to a nationally known tax prep company and were the clients of an EA (Enrolled Agent) who made multiple mistakes on the return which would have cost us over $1,700 unless I caught them, which I did. Unfortunately, I found another one today that will cost us another $266 when we file the amended return after we get the IRS refund direct deposited.

My daughter is a CPA on the opposite coast and is gobsmacked at my stories of incompetence here, and has offered (demanded) to do our federal taxes next year and beyond. I guess the whining worked.

BTW, In an effort at self defense I found a good SS income tax calculator that does all the incremental math for you, in case you are interested.

https://www.covisum.com/resources/taxab ... calculator

[OpenMinded1]

I will never understand why anyone would give the Federal Government a $3084 loan.

Not everyone has a predictable income stream.

+1

+2
I don't mind paying 5% too much in order to avoid being required to pay estimated taxes every quarter. In fact I do so intentionally to ward off any surprises.

That being said, I'm batting 1000 lately having my taxes done by "professionals" in our new location. Last year (2021 taxes) the owner of the tax prep company who has been in business for 20 years said I owed 27k in capital gains, which I didn't, and had to prove it to her.

This year (filed yesterday) we went to a nationally known tax prep company and were the clients of an EA (Enrolled Agent) who made multiple mistakes on the return which would have cost us over $1,700 unless I caught them, which I did. Unfortunately, I found another one today that will cost us another $266 when we file the amended return after we get the IRS refund direct deposited.

My daughter is a CPA on the opposite coast and is gobsmacked at my stories of incompetence here, and has offered (demanded) to do our federal taxes next year and beyond. I guess the whining worked.

BTW, In an effort at self defense I found a good SS income tax calculator that does all the incremental math for you, in case you are interested.

https://www.covisum.com/resources/taxab ... calculator

I'm in my mid-sixties, and have only used a tax preparer once, and that was about 30 years ago. They made a serious error, which luckily I caught before filing the return. The item that the preparer made a mistake on wasn't very complex at all.

[homebuyer6426]

It always amazes me when people can do their taxes this early - I'm still waiting on six 1099 forms from 3 different banks/brokerages!

Glad you were able to get yours done early!

Same here. I usually wait until February ends to be safe.

[oldfatguy]

Thanks for all the replies....the reason I made this post is I did not make any changes from 2022 to 2023 so I am trying to figure out why there is such a difference. I am wondering because of the tax credits of covid for my 3 kids possibly?

The only major change in our household is our income went up about $8000 in total so maybe thats it?

If you don't know why there was such a big difference from one year to the next, you probably need to check your (or your tax ppreparer's) work.

[billaster]

I will never understand why anyone would give the Federal Government a $3084 loan.

I also agree it doesn't make sense...but the mind is a funny thing!

As Livesoft pointed out, everyone who owns Treasury bonds loans money to the government. Perhaps you mean a no-interest loan?

But what about that $3,084 loan. The return of a money market fund last year was 1.5%. If the withholding was spread across the year, your average return was 0.75%.

0.75% on $3,084 is $23.

Some people obsess over the most trivial things. The mind is a funny thing.

[bg5]

Thanks for all the replies....the reason I made this post is I did not make any changes from 2022 to 2023 so I am trying to figure out why there is such a difference. I am wondering because of the tax credits of covid for my 3 kids possibly?

The only major change in our household is our income went up about $8000 in total so maybe thats it?

I think the child tax credits are a likely cause.

https://www.irs.gov/newsroom/get-ready- ... ng-in-2023


"Some tax credits return to 2019 levels. This means that affected taxpayers will likely receive a significantly smaller refund compared with the previous tax year. Changes include amounts for the Child Tax Credit (CTC), Earned Income Tax Credit (EITC) and Child and Dependent Care Credit.

Those who got $3,600 per dependent in 2021 for the CTC will, if eligible, get $2,000 for the 2022 tax year.
For the EITC, eligible taxpayers with no children who received roughly $1,500 in 2021 will now get $500 in 2022.
The Child and Dependent Care Credit returns to a maximum of $2,100 in 2022 instead of $8,000 in 2021."

you are correct....the child tax credit (I have 3 kids) was the big thing that had a big impact.

[White Coat Investor]

It always amazes me when people can do their taxes this early

Simplicity has its virtues. I'm with LiveSoft. I probably won't even meet with my accountant until the 2nd week of October. It's a rush just to figure out which states I will need to file extensions for.

I can understand end of feb or April buy why wait until October?

I think my last K-1 came in August last year. Accountants get busy too. So since I quit doing the returns myself, it seems to be a big rush the second week of April to get extensions in and best guesses on payments made and then a big rush in October to finish it all.

[tibbitts]

It always amazes me when people can do their taxes this early - I'm still waiting on six 1099 forms from 3 different banks/brokerages!

Glad you were able to get yours done early!

Same here. I usually wait until February ends to be safe.

The other aspect of this is that you might want to wait until tax software has gone through multiple update cycles.

[ray.james]

It always amazes me when people can do their taxes this early

Simplicity has its virtues. I'm with LiveSoft. I probably won't even meet with my accountant until the 2nd week of October. It's a rush just to figure out which states I will need to file extensions for.

I can understand end of feb or April buy why wait until October?

I think my last K-1 came in August last year. Accountants get busy too. So since I quit doing the returns myself, it seems to be a big rush the second week of April to get extensions in and best guesses on payments made and then a big rush in October to finish it all.

Ah I see. I know K1's can be delayed quite a bit due not that late!

[White Coat Investor]

It always amazes me when people can do their taxes this early

Simplicity has its virtues. I'm with LiveSoft. I probably won't even meet with my accountant until the 2nd week of October. It's a rush just to figure out which states I will need to file extensions for.

I can understand end of feb or April buy why wait until October?

I think my last K-1 came in August last year. Accountants get busy too. So since I quit doing the returns myself, it seems to be a big rush the second week of April to get extensions in and best guesses on payments made and then a big rush in October to finish it all.

Ah I see. I know K1's can be delayed quite a bit due not that late!

One of the prices you pay to have some "non-bogleheadish" investments. The benefit of course was making 18% in 2022 when everything else in my portfolio lost 10-30%. This year I get to find out if that drop was just delayed for private real estate investments due to not being marked to market as quickly as public REITs. I suspect it will be somewhat but hopefully not entirely.

[JoMoney]

It always amazes me when people can do their taxes this early - I'm still waiting on six 1099 forms from 3 different banks/brokerages!

Glad you were able to get yours done early!

Same here. I usually wait until February ends to be safe.

The other aspect of this is that you might want to wait until tax software has gone through multiple update cycles.

Meh... For those of us taking a standard deduction, with only W2 and simple interest income there's not much to be concerned about.
I had 1 W-2, a couple 1099-INT's, a 1099-DIV from a money market fund, and a 1099-R from a roth conversion. All pretty simple stuff, not much to worry about changing.

[tibbitts]

It always amazes me when people can do their taxes this early - I'm still waiting on six 1099 forms from 3 different banks/brokerages!

Glad you were able to get yours done early!

Same here. I usually wait until February ends to be safe.

The other aspect of this is that you might want to wait until tax software has gone through multiple update cycles.

Meh... For those of us taking a standard deduction, with only W2 and simple interest income there's not much to be concerned about.
I had 1 W-2, a couple 1099-INT's, a 1099-DIV from a money market fund, and a 1099-R from a roth conversion. All pretty simple stuff, not much to worry about changing.

One aspect I've tended to have to wait for is for the tax software to properly import the 1099 information correctly.

[EdNorton]

Is the IRS accepting 2023 returns already? I'm still waiting on my 2022 1099's.

[montanagirl]

Thanks for all the replies....the reason I made this post is I did not make any changes from 2022 to 2023 so I am trying to figure out why there is such a difference. I am wondering because of the tax credits of covid for my 3 kids possibly?

The only major change in our household is our income went up about $8000 in total so maybe thats it?

2021 was a really strange tax year. Child tax credit was increased, childcare credit increased, EIC rules loosened, etc. Plus the stims and advance CTC.

IT WAS ALL TEMPORARY COVID RELIEF.

I wouldn't compare 2022 to that year. It was freaking crazy.

[cadreamer2015]

My 2023 federal tax [refund] was $654

Is the IRS accepting 2023 returns already? I'm still waiting on my 2022 1099's.

I won't know my 2023 federal tax liability until February 2024 at the earliest. How do you know what your 2023 federal tax refund was/will be?

[MichRoots]

Wow....what a difference a year makes

My 2022 federal tax [refund] was $3084

My 2023 federal tax [refund] was $654

What about you????

OP has corrected the above in subsequent posts, this edit corrects his original post.

Moderator Pops1860

In 2022 I received a $100 refund. Didn't change anything and owe $2600 this year. Salary was maybe $10,000 higher, but the real culprit was no $3,000 child tax credit as my kid turned 17 last year. I thought the child credit was good until age 18. Oops.