As Americans prepare for the upcoming tax season, the IRS has made several changes to various tax credits and incentives. Credits like the Child Tax Credit (CTC), Earned Income Tax Credit (EITC), and the Child and Dependent Care Credit (CDCTC) are dropping back to 2019 levels.
This might mean that you receive less of a refund this year, so it’s important to understand the new tax credit amounts so you can prepare.
Child Tax Credit
If you received $3,600 per dependent child under five years old and $3,000 per dependent child between the ages of six and 17 in 2021, you will now only receive $2,000 per child. Also, for the 2022 tax year, the age limit to qualify for the CTC drops back down to 16 years old.
Since no Advanced Child Tax Credit was distributed in 2022, however, the amount of credit you can claim on your 2022 income tax return may be greater than it was during the 2021 tax season if you still have children under 17.
Earned Income Tax Credit
In the 2021 tax year, eligible taxpayers with no children received an enhanced EITC of $1,500. This tax year, that amount drops back down to $500.
Child and Dependent Care Credit
The maximum amount taxpayers can claim for child or dependent care for 2022 drops back to $2,100, from $8,000 in 2021.
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If you have any questions or concerns about these or other tax credits as you prepare to file your federal income taxes in 2023, it’s smart to speak to a tax professional for guidance.
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