This year many filers can take advantage of unique tax benefits included in the American Rescue Plan and other recent legislation.
Often, individuals and families can get these expanded tax benefits, even if they have little or no income from a job, business or other source. This means that many people who don’t normally need to file a return should consider doing so this year.
Expanded Tax Benefits
A new fact sheet, FS-2022-10, available now on IRS.gov, describes many of these expanded tax benefits. But the IRS emphasized that these benefits are only available to people who file a 2021 federal income tax return. Benefits include:
- An expanded Child Tax Credit: Families can claim this credit, even if they received monthly advance payments during the last half of 2021.
- An increased Child and Dependent Care Credit: Families who pay for daycare so they can work or look for work can get a tax credit worth up to $4,000 for one qualifying person and $8,000 for two or more qualifying persons.
- A more generous Earned Income Tax Credit: The American Rescue Plan boosted the EITC for childless workers. There are also changes that can help low- and moderate-income families with children.
- The Recovery Rebate Credit: Those who missed out on last year’s third-round of Economic Impact Payments (EIP3), also known as stimulus payments, may be eligible to claim the RRC. This credit can also help eligible people whose EIP3 was less than the full amount, including those who welcomed a child in 2021.
- A deduction for gifts to charity: The majority of taxpayers who take the standard deduction can deduct eligible cash contributions they made during 2021. Married couples filing jointly can deduct up to $600 in cash donations and individual taxpayers can deduct up to $300 in donations. In addition, itemizers who make large cash donations often qualify to deduct the full amount in 2021.
Besides all W-2s and 1099s, there are two important statements issued by the IRS to look out for — Letter 6419, showing your total advance Child Tax Credit payments, and Letter 6475, showing your total EIP3 payments. Individuals can also use IRS Online Account to see the total amounts of their third round of Economic Impact Payments or advance Child Tax Credit payments. Married spouses who received joint payments will each need to sign into their own account to retrieve their separate amounts.
For most Americans, the tax-filing deadline is April 18, 2022. For residents of Maine and Massachusetts, the deadline is April 19, 2022. For Americans who live and work abroad, it’s June 15, 2022. Anyone who needs more time to file can get an automatic extension until Oct. 17, 2022.
The IRS is experiencing a historic lack of workers and a backlog of returns that gets bigger by the day. The longer you wait to file, the longer it will take to receive any refund that you are entitled to. Give us a call today to get started!