Nobody enjoys filing their annual taxes, but thanks to changes in the tax code, you could receive a bigger refund this year than you did in 2021. The IRS will start accepting tax returns on Jan. 24, and your best bet is to get your tax return in early.
And keep close track of any correspondence you receive from the IRS. Here are five changes to keep in mind as you prepare to file your return.
1. The Child and Dependent Care Credit doubled
If you paid for child care in 2021, you could receive a much bigger tax refund this year. The Child and Dependent Care Credit allows parents and caregivers to directly reduce any money spent on daycare, babysitters, or transportation from their taxes.
You can claim up to $8,000 for one dependent and up to $16,000 for two dependents. This credit applies to any dependent children under the age of 13.
You can also use the tax credit if you have a dependent spouse or individual incapable of caring for themselves who lived with you for more than half of the year.
2. The Child Tax Credit was temporarily expanded
The Child Tax Credit is available to anyone with children under the age of 17. You can receive a $3,000 tax credit for children between the ages of six and 17 and a $3,600 tax credit for kids under the age of five.
This year, you can receive the maximum amount available on the tax credit even if it surpasses your federal income tax liability for the year. However, the IRS did make advance payments on the tax credit this year. You can expect to receive a letter from the IRS detailing how much you received in 2021.
3. Recovery rebate credits are available
The IRS sent out three rounds of Economic Impact Payments to eligible Americans. If you never received your third stimulus payment, you may qualify for a Recovery Rebate Credit. You can log into your online account with the IRS to determine whether you’ve received all three payments.
4. The Earned Income Tax Credit was expanded
The Earned Income Tax Credit is available for low- to moderate-income families. To qualify, you must have earned less than $57,414 in the previous year and have less than $10,000 in investment income.
This year, the credit is available to childless workers that are 19 or older. It’s also available to workers aged 65 or older. Families with three or more qualifying children could receive a maximum tax credit of $6,728.
5. Take advantage of a special charitable deduction tax credit
Most people take the standard deduction, so they can’t deduct their charitable contributions. But this year, the IRS is allowing anyone who takes the standard deduction to also deduct up to $300 in qualifying charitable donations. If you’re a married couple filing jointly, you could deduct up to $600.