IRS tax refunds will be smaller in 2023

The Internal Revenue Service is alerting taxpayers about a number of changes that will be made in the tax filing year 2023.

Your tax refund, if you are eligible for one, may be smaller than the one you received in 2022.

There was no federal stimulus payments issued this year, and many taxpayers received their stimulus checks along with the refunds they received after filing their 2021 tax returns.

The average refund went from $2,863 in 2021 for the 2020 tax filing year to $3,253 in 2022 for the 2021 tax filing year. Another change: taxpayerpayers who take the standard deduction will not be able to use their charitable contributions to lower their taxable income. In 2021, the IRS allowed individuals to deduct $300 per person, or up to $600 per family, in charitable contributions even if they didn't itemize other deductions, according to the tax preparation website CPA Practice Advisor. The allowance will no longer be available.

The IRS is reminding taxpayers transactions that earned them $600 or more must be reported, including ones made on third-party apps like Venmo. Tax forms were required only if the transaction exceeded $20,000.

You do not have to report money received through third-party payment applications from family or friends that came as personal gifts or reimbursements for personal expenses, according to the IRS.

The agency is taking extra measures to ensure identity theft and tax fraud, and is warning people not to expect refunds by a certain date.

It may take a bit longer for the IRS to review your tax return because of additional due-diligence by the IRS.

The IRS said as of Nov. 11, it is still processing 3.7 million individual returns, including tax year 2021 returns and late-year returns. Of those, 1.7 million required error correction or other special handling, and 2 million were paper returns waiting to be reviewed and processed.