Tax Preparation New Haven 2026: 10 Reasons Your Refund Is Smaller Than Last Year (And How to Fix It)

If you filed your 2026 taxes and your refund looks smaller than expected, you're not alone. Thousands of New Haven families are seeing reduced refunds this year: and it's not a mistake. Several federal tax changes, expired credits, and common filing errors are behind these disappointing numbers.

The good news? Most of these issues can be fixed. Whether you're filing yourself or working with a concierge tax pro, understanding what changed can help you maximize your tax refund and avoid leaving money on the table.

10 Reasons Your 2026 Refund Is Smaller!

1. The Child Tax Credit Dropped Back Down

The expanded Child Tax Credit (CTC) that many families enjoyed during the pandemic has officially expired. For 2026, the credit is back to $2,000 per qualifying child under age 17: not the $3,600 per child under 6 or $3,000 per child ages 6-17 that families received in prior years.

What this means: If you have two young kids, you could be missing out on $3,200 compared to previous years.

2. No More Stimulus Recovery Rebate Credits

The Recovery Rebate Credit, which allowed taxpayers to claim missed stimulus payments on their tax returns, is no longer available for 2026 returns. This was a common refund booster in recent years.

3. Standard Deduction Increases Can Backfire

While the standard deduction increased to $14,600 for single filers and $29,200 for married couples filing jointly, this can actually reduce your refund if you itemized deductions in previous years. Higher standard deductions mean fewer people benefit from itemizing, which can eliminate deductions for mortgage interest, charitable donations, and state taxes.

4. Your Withholding Changed (And You Didn't Notice)

Did you get a raise, change jobs, or update your W-4 in 2025? Your employer may have withheld less tax from your paychecks throughout the year: meaning you got more money per paycheck but a smaller refund at tax time.

Fix: Review your W-4 annually and adjust withholding to match your actual tax liability.

5. The Earned Income Tax Credit (EITC) Got Stricter

The EITC amounts were adjusted for inflation in 2026, but the income limits also changed. If your income increased slightly, you might no longer qualify for the full credit: or any credit at all.

New Haven tip: If you're a low-to-moderate-income worker, double-check EITC eligibility requirements before filing.

6. You Forgot About Side Hustle Income

Drove for Uber? Sold items on eBay or Etsy? The IRS now requires payment platforms to issue Form 1099-K for accounts with over $5,000 in transactions (down from the previous $20,000 threshold). If you didn't report this income, your refund could be delayed: or you might owe taxes instead.

7. No More Pandemic-Related Tax Breaks

Several pandemic-era tax benefits expired, including:

• The above-the-line charitable deduction for non-itemizers
• Expanded Flexible Spending Account (FSA) rollover rules
• Employer-paid student loan repayment exclusions

8. Energy Tax Credits Changed

The Residential Clean Energy Credit and Energy Efficient Home Improvement Credit are still available, but the rules changed. If you installed solar panels, heat pumps, or energy-efficient windows in 2025, you need to use the updated forms and limits to claim these credits correctly.

Common mistake: Many taxpayers forget to claim these credits entirely or miscalculate the eligible amount.

9. State Tax Refund From Last Year Counts as Income

Did you receive a Connecticut state tax refund in 2025? If you itemized deductions on your 2024 return, that refund is now taxable income on your 2026 federal return. This surprise "income" can reduce your federal refund or increase what you owe.

10. Filing Errors and Missed Deductions

The most common reason for smaller refunds? Simple mistakes. Taxpayers miss deductions for:

• Student loan interest payments
• Educator expenses (teachers can deduct up to $300)
• Health Savings Account (HSA) contributions
• Self-employment expenses
• Retirement account contributions

Reality check: The average taxpayer leaves $460 on the table due to missed deductions, according to recent IRS data.

How to Fix It and Maximize Your Refund!

Work With a Tax Pro Who Knows the New Rules

Tax preparation New Haven services like Jose's Tax Service stay current on every credit, deduction, and rule change. A professional review can uncover missed opportunities that DIY software overlooks.

Key advantage: Jose's Tax Service offers virtual and in-person consultations with $0 upfront: you only pay when your return is complete.

Review Your Withholding NOW

Don't wait until next tax season. Use the IRS Tax Withholding Estimator to calculate your ideal withholding and submit a new W-4 to your employer. This ensures you're not giving the government an interest-free loan all year.

Maximize Retirement Contributions

Contributing to a traditional IRA, 401(k), or similar retirement account reduces your taxable income and can increase your refund. For 2026, you can contribute up to $7,000 to an IRA ($8,000 if you're 50 or older).

Deadline reminder: You have until April 15, 2026, to make IRA contributions that count for your 2025 tax year.

Claim Every Business Expense

If you're self-employed or have side income, track every business expense:

• Home office deduction
• Mileage at $0.70 per mile for 2026
• Equipment and supplies
• Professional development and education
• Business-related software subscriptions

Don't Forget About Education Credits

The American Opportunity Tax Credit (AOTC) offers up to $2,500 per eligible student, while the Lifetime Learning Credit provides up to $2,000 per return. If you or your dependents paid for college in 2025, claim these credits.

Double-Check Dependent Information

Make sure your children's Social Security numbers are correct and that they meet the qualifying child or qualifying relative tests. One typo can delay your entire refund.

Get Help From New Haven's Trusted Tax Pros

If your refund is smaller than expected: or if you want to maximize your tax refund for next year: don't go it alone. Jose's Tax Service offers comprehensive tax preparation New Haven residents trust, with both virtual and in-person appointments available.

Why choose a concierge tax pro?

• Personalized tax planning (not just filing)
• Knowledge of Connecticut-specific deductions
• Representation if you're audited
• Year-round support for tax questions

$0 upfront means no risk. You'll know exactly what your refund looks like before you pay a single dollar.

Ready to stop leaving money on the table? Schedule your tax consultation today and find out what you've been missing.

Jose's Tax Service
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