The Child Tax Credit and the Third Stimulus Check Will Boost Tax Refunds in 2022!

Tax season is a bit less unpleasant for many taxpayers this year, thanks to larger than normal returns.

Tax refunds are averaging $3,226 so far this tax season. That’s 11.5 percent higher than the previous year, according to figures from the IRS.

Could it be a mistake? Probably not. Instead, there are a few legitimate reasons IRS refunds are greater this year.

A more generous Child Tax Credit improved refunds for some taxpayers. In 2021, the credit increased to $3,600 per child under age six from $2,000 per child in 2020.

Parents of children aged 6 to 16 also received a raise in 2021 to $3,000 per kid, up from $2,000 in 2020. Taxpayers in 2021 were also entitled to receive up to $3,000 for 17-year-olds.

Child Tax Credit

How the credit affects your refund depends on whether you took advantage of the monthly advance of up to $250 per child aged 6 to 17 or $300 for each child under 6.

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Families that received the payouts, which started in July and concluded in December, can submit the remainder of the credit on their 2021 tax returns. The credit may result in a tax refund, depending on how much the taxpayer owes.

A lump-sum tax credit is available to taxpayers who did not receive advance payments.

Deputy director of federal tax policy at the Center on Budget and Policy Priorities, Kris Cox, says that your return should be similar to last year’s if you made advance payments and claimed the same credits.

As a reminder, “it is crucial to remember that even for persons who claimed the early CTC payments,

it is not that their refunds are smaller on an annual basis, it’s that they had received half of their CTC return in advance last year,” Cox said in a press release.

Third Stimulus Check

Expansion of the Earned Income Tax Credits

Workers without children will be able to claim the Earned Income Tax Credit (EITC) beginning in 2021, and dependents who are 19 or older will also be eligible (excluding students).

Previously, the credit was only available to low-income taxpayers between the ages of 25 and 64 who did not have any children.

People who were previously qualified to receive the maximum credit amount increased from $500 to nearly $1,500, “substantially increasing the benefit for many people,” says Cox.

Tax refunds are delayed, but now is the time to save or splurge.

Better for taxpayers or yet another handout to the super-rich, a state flat tax?

The American Rescue Plan includes a regulation that allows taxpayers to use their 2019 income to calculate their EITC payment if it is higher than their income last year. This rule is a possible refund booster.

According to a statement on the IRS website, “in some cases, this alternative will provide them with a greater credit”.

You may have received a third stimulus payment

If you’re married and filing jointly, you may be eligible for up to $2,800 under the American Rescue Plan, which is based on your household income.

More Updates:

Adult dependents are entitled to an extra $1,400 for both single and joint taxpayers, regardless of marital status.

For those who didn’t get a stimulus payment or had a baby in 2021, you can claim the recovery rebate credit to add to your tax refund for the year.

A STIMULUS CHECK IS MISSING? Use IRS Letter 6475 to claim the Recovery Rebate Credit.

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CPA and tax expert Lisa Green-Lewis, a TurboTax tax expert, recommends that tax filers have IRS letter 6475, which reports how much stimulus payment they received,

so they can enter the correct amount and claim additional stimulus in the form of a Recovery Rebate Credit they are eligible for when they file their taxes.

“The reported average refund could drop as more tax returns are processed,” she warned. As of April 1, the Internal Revenue Service has processed more than 89 million tax returns.

The IRS processed more than 169 million returns at the end of the tax season last year.

As Cox told USA TODAY, taxpayers should expect lesser refunds in the coming year if Congress does not pass legislation to improve CTC and EITC payments and other COVID-era relief programs.

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