Four big policy changes that can boost your tax refund in 2022
IT’S almost time to start filing taxes – and many American families will find themselves getting a larger refund this year.
Beginning January 24, Americans will be able to start filing tax returns.
Taxpayers can also expect their W-2 forms from their employers soon, which shows key information about taxes and your income.
The $1.9trillion American Rescue Act, signed into law by President Joe Biden last March, included major new and expanded policies to help individuals and families navigate around the financial hardship of the coronavirus pandemic.
We unveil a few changes from the law that could boost your refund once you file this year.
Stimulus checks
The Rescue Act was headlined by $1,400 stimulus checks, which tens of millions of Americans have already received.
However, millions are still owed $1,400 stimulus payments.
This includes a couple of reasons:
- If your family had a child in 2021
- If you’re living abroad
Just thousands of Americans living overseas have received stimulus checks during the pandemic, according to CNBC.
According to the Department of State, roughly 9million US citizens live outside the country.
Single filers who make up to $75,000, and couples earning up to $150,000 qualify for the latest round of federal stimulus.
Past those thresholds, the $1,400 check starts to phase out and it's then capped out at $80,000 and $160,000 respectively.
Child tax credit
Another key provision under the Rescue Act expanded the child tax credit payments from up to $2,000 per kid to $3,600.
While the expanded child tax credit has expired, tens of millions of eligible families received up to $300 per child in monthly payments from July to December – giving them as much as $1,800.
As a result, families who received all those payments will be able to claim the remaining up to $1,800 per child on their tax return.
However, if you were eligible and did not receive them, you’ll be able to claim the full $3,600 on your tax return.
To qualify for the full payments, couples need to make less than $150,000 and single parents who file as heads of households need to make under $112,500.
Child and dependent care tax credit
Families with child care expenses in 2021 will be able to claim up to $8,000 in tax credits this year.
This is known as the child and dependent care tax credit, which was also expanded under the Rescue Act.
Families can now claim up to 50% of qualifying expenses, up from 35% previously.
Once that threshold exceeds that number, the credit percentage rate starts to phase out from 50%.
Specifically, families with more than one kid who spent $16,000 in qualifying expenses will be able to claim care credits of up to $8,000.
Claimants with one child can receive credits of up to $4,000.
In most cases, care credits are available to parents with children under 13.
However, there might be some exceptions for dependents who cannot care for themselves.
Specifics that count as qualifying expenses include, transportation, housekeepers, babysitters, before and after school programs, as well as day camps and daycare.
Earned income tax credit
Families who didn’t qualify for child tax credit and the care credits because they don’t have a qualifying kid might be eligible this time.
The earned income tax credit is available to low- and moderate-income families.
If you do not have children, the maximum credit has been expanded to $1,502 for 2021, up from $543.
While you don’t need children to qualify, the more you have the larger your refund will be.
For example, those with one or two children can claim a maximum of $3,618 and $5,980.
Those with three or kids or more can claim up to $6,728.
Low-income working Americans with no children must make no more than $21,430, or $27,380 if married and filing jointly to qualify.
For two children, single filers can make up to $47,915, or $53,865 for married couples.
You can calculate your tax refund by checking out these calculators.
Read More on The US Sun
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