Be ware of some tax changes that affects parents. (Photo: Inc. Magazine)
The Internal Revenue Service (IRS) makes changes that may impact you and your tax bill yearly. If you’re a parent, you should be aware of some tax changes for the current tax year before filing, such as who qualifies for specific tax credits and how much they’re worth.
Reduced Child Tax Credit and Child and Dependent Care Credit
This tax year, many credits have changed, resulting in smaller tax refunds than usual, and two, in particular, may affect parents.
CPA, April’s head of tax strategy and evangelism, Jody Padar, said that, parents would be affected by the Child Tax Credit (CTC), which has been reduced from $3,600 to $3,000 in 2022 or lower depending on your income.
The child and dependent care credit is the second tax credit to be aware of.
Padar said that individuals with children would also be affected by the Child and Dependent Care Credit (CDCC), which has been reduced from $4,000 for one child and $8,000 for two to $1,050 and $2,100, respectively.
The income levels required to qualify for the maximum child and dependent care credit have also been reduced.
READ ALSO: Biden Wants To Renew Enhanced Child Tax Credit To Low-Income Families
Be ware of some tax changes that affects parents. (Photo: MSN)
You must earn an income to be eligible for the CTC or CDCC.
One of the tax changes is that high-income earners may no longer be eligible for these credits, and those without income will also be ineligible, a change from previous years.
No Child Tax Credit Payments in Advance
Advance payments of up to half the child tax credit were available to eligible taxpayers under the American Rescue Plan of 2021, but this is no longer the case.
You Might Be Eligible For The American Opportunity Tax Credit
Even though these tax changes occurred in 2009, you may need to be made aware of the transition from the Hope Scholarship Credit to the more generous American Opportunity Tax Credit, which applies to eligible education expenses paid for a dependent child.
READ ALSO: Check Your Eligibility for Child and Dependent Care Tax Credit
