If you’re a taxpayer who normally receives refunds on your tax return, you may notice you’re getting less back this year. A big reason: the tax credit enhancements during the COVID-19 pandemic are gone.
Child Tax Credit
Before the pandemic, eligible American parents received up to $2,000 in tax credits for each dependent child under age 17. That money was paid out at tax time.
Under the American Rescue Plan signed in March 2021, that amount was increased in 2021 to $3,000 for children under age six and $3,600 for those ages 6-18, depending on their parents’ income.
Parents had the option to take up to half that money in the form of monthly payments from July – December 2021 and take the other half at tax time in 2022. Or, they could opt out of the monthly payments and take the full amount at tax time.
But that Child Tax Credit expansion was not extended in 2022, so it reverted back to $2,000, which will come when people file their taxes.
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Most Americans received stimulus payments of $1,200 and $600 in 2020 as part of pandemic relief efforts. A third check of $1,400 came in 2021.
Most people got those payments as an advance in the form of a check or direct deposit in the weeks after they were passed by Congress. But those who did not receive those checks instead were able to get the money when they filed their 2020 and 2021 tax returns, in the form of what was called the Recovery Rebate Credit.
There was no stimulus payment in 2022, so people filing their taxes this year won’t see that money when they file taxes this year.
Enhanced Income Tax Credit
The EITC is a tax break for people in the low- to-moderate income range. While inflation did give a boost to the EITC, a pandemic-level enhancement has gone away.
For tax year 2022, the EITC is anywhere from $16,480 – $59,187, depending on whether the filing status is single or jointly and how many dependent children are claimed.
Take your time and file electronically
If you’re anticipating a refund and want it quickly, the IRS has two pieces of advice.
First, take your time and be sure to avoid errors. Mistakes — including failure to sign your return — can delay things significantly.
Second, file electronically. The IRS says it already has a paperwork backup and is still trying to dig out from the pandemic. Filing electronically will dramatically speed up the process. E-filed refunds generally are returned within three weeks.