Why Parents Might Downplay This Year’s Tax Returns

(NEXSTAR) – In addition to inflation, this year looks set to be a year of disappointing tax refunds for many people, especially parents.

in change this year Significant cuts to two tax credits that gave parents a financial boost in reimbursement during the pandemic, but have now been rolled back to previous levels.

The Childcare and Dependent Care Credit, designed to help working parents pay for childcare, has been increased to a maximum of $4,000 for one eligible individual and $8,000 for two eligible individuals. As a refundable credit, you can receive credit even if you are not obligated to pay taxes and have no income to declare.

Unfortunately for parents, the extended credit enacted as part of the American Rescue Planning Act of 2021 has been reduced to a non-refundable maximum of $1,050 for one eligible person and $2,100 for two. rice field.

Another boon for parents last year, the children’s tax credit, reverted to $2,000 for children of all ages. For Filer in 2021, the credit was $3,600 for her children under the age of 6 and $3,000 for him for children aged 6 to her 17.

“For example, self-employed parents, whether they run traditional-style businesses or are part of the gig economy, typically take a hit in taxes if these taxpayers don’t pay the estimated amount. Adam Brewer, a San Diego-based tax attorney, told Nexstar: “Often, if you have kids, it’s kind of a buffer and gives you extra credit to manage your balance. We can, but with less credit, some taxpayers will have more debt than expected.”

Credits, perks to remember when submitting

Worried about your refund this year? There are some strategies that may apply to your situation and should not be overlooked.

if you buy qualifying round If you buy an electric vehicle in 2022 or 2023, the new version of the EV tax credit will be up to $7,500. Vehicles purchased before 2022 can continue to be claimed on old credits by submitting an amended return for the year of purchase.

of adoption tax credit will provide eligible costs up to $14,890 for parents who were in the adoption process in 2022. The eligibility requirements state that the child must be “under the age of 18 or physically or mentally incapable of caring for themselves.”

If you are eligible to apply as Head of Household, this could be another way to improve your reimbursement for 2022. Household heads generally enjoy higher standard deductions and lower tax rates. You can submit only if:

  • Unmarried or considered unmarried by the end of 2022
  • Paid at least half of the household upkeep.
  • Those who have lived with the target person for more than half a year.Please refer to IRS website for more information.

Finally, instead of spending money on an expensive tax accountant, IRS Free Fileas long as you had an income of $73,000 or less in 2022.

The tax season officially started on January 23rd. Submission Deadline It’s April 18th.

https://www.mystateline.com/news/why-parents-may-see-a-smaller-tax-return-this-year/ Why Parents Might Downplay This Year’s Tax Returns

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