01/23/2023
Tax Season is here!
If you typically receive a refund when filing your taxes, there are some changes for the 2022 tax year that you should be aware of because you could see a difference in comparison to the last few years.
Earned income tax credit: The past couple of years we have been able to use our 2019 income to determine eligibility of this credit. This will now be based off your 2022 income meaning this credit could be reduced or eliminated completely if you have seen an increase in income.
Childcare: Going back to pre-COVID $2000 nonrefundable when it was $8,000 refundable previously.
Child Tax Credit: Last year this credit was $3600 for children ages 0-5 and $3000 for children ages 6-17. For 2022 it is going back to $2000 for children ages to 0-16.
There will be no recovery for missed stimulus payments.
Child and Dependent Care Credit for 2022
The Child and Dependent Care Credit provides a tax break for many parents who are responsible for the cost of childcare. Though the credit is geared toward working parents or guardians, taxpayers who were full-time students or who were unemployed for part of the year may also qualify.
If you paid a daycare center, babysitter, summer camp, or other care provider to care for a qualifying child under age 13 or a disabled dependent of any age, you may qualify for a tax credit on your 2022 taxes of up to 35% of:
- up to $3,000 of qualifying expenses (for a maximum credit of $1,050) for one child or dependent, or
- up to $6,000 of qualifying (for a maximum credit of $2,100) for two or more children or dependents.
For example, for tax year 2022 a taxpayer with one qualifying person, $3,000 in qualifying expenses and an AGI of $60,000 would qualify for a nonrefundable credit of approximately $600 (20% x $3,000). By contrast, under the new law for tax year 2021 only, a taxpayer with the same circumstances can potentially claim a refundable credit of approximately $1,500 (50% x $3,000).
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