Buffalo, N.Y. (WBEN) - Some taxpayers may have been unpleasantly surprised during this tax season to find that their returns are lower than the previous couple of years.
"When you take a look at some of the withholding that's been done on W-2s, in some cases, the state withheld more than the federal," said Esther Gulyas, EG Tax President.
The new W-4s could be a factor, according to Gulyas, as some may have filled the more complicated form out incorrectly. Another factor could be the changing of the withholding chart. However, the biggest reason could very well be attributed to the COVID relief credits.
"When they were doing all of the COVID stimulus stuff, that was all kind of baked into the pie too," said Gulyas. "Then they went ahead and did all these gigantic credits for children for 2021. Those have all been set set aside.
Kids now under the age of 17, it's $2,000 across the board, whereas last year, under the age of 18, it was $3,000. And under the age of six, it was $3,600. That's where a lot of the money is going. If you've got a family of four, let's face it, that's over $4,000 that you're paying extra in taxes this year."
Gulyas says there's a difference in childcare credits also.
"The maximum is 30%. It goes from 20 to 30%, with a maximum of $5,000. It's way different, last year it was up to 50%, so a lot of major changes. And last year, it was refundable, it's not refundable this year."
Looking to save on taxes? A traditional IRA is a good option if you are working or self-employed says Gulyas.
"Let's say you got a bank account, making no money, and you move the bank account from the savings to an traditional IRA, and you put in $6,000, and you're in the 20% bracket, federal, 5%, New York State. You save $1,500 just by moving the money around. You don't have to put it in the market. There are CD IRAs right now that are paying 5%. It's a great way to make money and save money on your taxes."
The last day to file your taxes is Tuesday, April 18th. However, Gulyas recommends that you don't wait to file, especially if you figure that you will have to pay on your taxes.
"The big penalty is, if you don't file your return, because that can go up to 25% of your liability. Whereas if you just don't pay, it's like .05% until it gets to 25% Sometime later. The big penalty is if you don't file your return, you can set up a payment program right with the IRS."