Low Income Families To Receive Amazing 2022 Tax Credits
(USNewsMag.com) – For several months in 2021, the government paid out the enhanced child tax credit hoping to ease the financial burden on many American families. The final payment was distributed in December, but there’s still help in the form of two main 2022 tax credits for low-income families.
Here’s what you need to know.
Earned Income Tax Credit
This enhanced child tax credit was the advance payment many Americans saw last year on a monthly basis, in the form of either $250 or $300 per child, depending on their age. The Earned Income Tax Credit, or EITC for short, was increased because of the pandemic. For those who opted to receive the monthly payments, the amount they’ll receive when they file 2021 taxes will be lower than prior years, but they’re still entitled to half of the benefit since only half was paid out. The actual amount of the credit ranges from $1,502 to $6,728 depending on income levels and how many children are in the household.
However, this tax credit also applies to low-income individuals who don’t have children. To qualify, they must make $21,000 or less per year and be between the ages of 19 and 24.
Some states may also tack on child tax credits, increasing the refund or lowering the tax liability amount of an individual or family’s 2021 return.
Child and Dependent Care Tax Credit
The Child and Dependent Care Tax Credit is a lesser-known tax benefit, but it can help immensely. This is separate from the aforementioned EITC. This particular benefit helps to offset the costs of paying for child and dependent care. The American Rescue Plan, signed in March of 2021, expanded the cap to $8,000 per dependent — which is a child under 13 or a qualifying adult — from its previous $3,000 limit. Instead of a $6,000 maximum cap on the credit, individuals and families can now claim up to a total of $16,000.
Both the EITC and the Child and Dependent Care Tax Credit are refundable, meaning they will either increase a refund or reduce what is owed to the IRS. Additionally, a person doesn’t need to have taxable income to qualify for the credit.
Help Is Available
If you’re confused about either of these tax credits, don’t know where to start, or aren’t sure if you qualify, there’s help available. Contact certified tax professionals in your area to get in-depth knowledge and tips, so you can maximize your tax return. For lower-income families, there are free tax preparation companies that can help you at no cost at all.
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