IRS Changes To Tax Breaks Are Coming

Taxpayers who took advantage of the expanded benefits from the American Rescue Plan when filing their2021 tax returns are being reminded that many of those expanded benefits will no longer be in place for 2022.

According to TurboTax, many tax credits enjoyed in 2021 will either go back to the way they were or will be unavailable when filing a 2022 tax return, including the American Rescue Plan’s changes to the Child Tax Credit and the Earned Income Tax Credit.

Be aware: These IRS tax breaks are changing for 2022 filing | The Hill

The 2021 rules for the Child Tax Credit that will not apply in 2022include the up to $3,600credit for each dependent child and the $3,000 credit for children 6 to 17. When filing in 2022, taxpayers can only qualify for the Child Tax Credit if the dependent children are under the age of 17. The credit per dependent child will only be up to$2,000.

The credit for child and dependent care has also changed. In 2022, filers will no longer get up to a 50 percent credit on $8,000 in care expenses for a child under 13 or an incapacitated spouse or parent. Nor will filers receive up to 50 percent off on$16,000 in care expenses for two or more dependents.

Filers will also no longer receive are fundable credit if they live in the US for more than 6 months and didn’t owe any taxes. When filing in 2022, taxpayers will only qualify for up to a 35 percent credit on $3,000 in care for a child under 13 or an incapacitated spouse or parent. Likewise, filers will only receive up toa 35 percent credit on $6,000 in care expenses for two or more dependents.

In 2021, the credit amount for care only decreased if your Adjusted Gross Income exceeded$125,000. But for 2022, the credit will decrease if your Adjusted Gross Income is over $15,000. For the Earned Income Tax Credit, 2021 filers over 65 and between the ages of 19 and 25 were eligible if they didn’t have children.

But that will no longer be the case in2022. Filers without children have to be between the ages of 25 and 65 to be eligible. In 2021, the EITC was up to $6,728 for filers with three children or more.

But for this year, that amount of the credit will increase to up to $6,935. According to TurboTax, neither the Recovery Rebate Credit for those not receiving a third stimulus check nor the Self-Employed Sick and Family Leave credits will apply when filing a 2022tax return.