Important Changes for the 2022 Tax Season
The 2022 tax season will have several changes that every taxpayer should be aware of before filing their taxes this season. It is important to know how you are affected because a mistake on your tax return could delay your refund, if owed, weeks or even months. This was a big problem during the last tax season with the Stimulus checks.
Some of the key changes for the 2022 tax season include:
Credit Payments on Child Tax
Recovery Rebate Credit for 3rd Stimulus Payments
Child and Dependent Care Credit
Credit Payments on Child Tax
The biggest change that we would like to discuss is the Child Tax Credit. The IRS did something they have never done before this past year and that was sending child tax credit payments as monthly payments. Depending on the amount of your monthly child tax credit payments received in 2021, you may receive a bigger tax refund, get a smaller refund than expected—or even owe additional taxes. If you received at least one of the monthly payments then you should be aware of the following steps one needs to take about child tax credit payments.
Any family that received advance payments in 2021 will be required to check for Letter 6419 from the internal reporting service. The letter will total the credit payments of child tax received in 2021. According to IRS, all families that did not get their monthly advance payments in 2021 will be eligible to claim their child tax credit payments while filing the returns due on 18th April 2022.
Recovery Rebate Credit and Stimulus Payments
Stimulus check is also referred to as the third economic impact payment. If one qualified bust did not receive or did not get the full amount of the stimulus check, one can receive the Recovery Rebate Credit. Therefore, it is mandatory to file the 2021 tax return to claim the credit. The third stimulus payment amount will be sent in early 2022 through Letter 6475 by IRS.
Expanded Child and Dependent Care Credit
As a result of the coronavirus pandemic, there is a provision allowing taxpayers to take up to a credit up to 50% of $8,000 ($4,000) in child care expenses for one child under 13, an incapacitated spouse or parent, or another dependent so that you can work and up to 50% of $16,000 in expenses ($8,000) for families with two or more dependents. In previous years the credits were non-refundable but this tax season it will be refundable which is another win for tax payers.
The deadline to file 2021 tax returns is before 18th April 2022. Taxpayers should file early in advance to avoid delays.