Up to $2,100 in tax credits can still be claimed despite the Internal Revenue Service (IRS) ending the tax credits launched during the COVID-19 pandemic. With these changes, it is important for taxpayers to prepare for this year’s tax season.Due to the COVID-19 pandemic, many changes were made to the federal tax breaks to help families with their financial needs. However, with the COVID-19 pandemic declining, the Internal Revenue Service (IRS) has decided to end the tax credits they have launched in that era. Most of the tax credits launched during that time will now be brought back to how they were before the COVID-19 pandemic. This means that taxpayers will be receiving a lower tax refund this year, as reported by Jain.
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Child Tax Credit
According to Jain, in 2021, several families have received a child tax credit of $3,600 per eligible child under the age of five. On the other hand, eligible children ages 6 to 17 have received $3,000 each. However, this year, families are expected to receive only $2,000 in tax credits per eligible child. The age limit to qualify for the Child Tax Credit has also been brought back to 16 years old.
Advanced Child Tax Credit
In 2022, there was no Advanced Child Tax Credit distributed. Therefore, taxpayers with children below 17 are expected to receive more tax credits in their 2022 income tax return compared to what they have received in 2021.
Earned Income Tax Credit
For the Earned Income Tax Credit (EITC), eligible taxpayers without children have still received their EITC worth $1,500 in 2021. However, in 2022, the tax credits have been reduced to $500.
Child and Dependent Care Credit
The Child and Dependent Care Credit have also been reduced to $2,100 in 2022 in comparison to $8,000 from 2021.
According to Jain, apart from the changes in tax credits launched during the COVID-19 pandemic, the IRS has also made changes to the charitable deductions. Single taxpayers will receive $300 each, while joint taxpayers will receive $600 each.
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