What you need to know:
In 2022, the unprecedented nature of the way this tax-filing season is going to be is due to the COVID pandemic. As the IRS advised, if you received an Economic Impact Payment or an advance Child Tax Credit, you should pay extra attention.
You need to report the correct amount on your tax return, in order to avoid any delay. These features left more room for error, either because the IRS didn’t tally all Americans’ stimulus totals right, or because taxpayers made a math error.
Child tax credit
If you’re living in a U.S. household and you have dependent children, you must pay attention when you submit your tax return this season. This is your only opportunity to reconcile any possible child tax credit payments that have been missing or even settle an overpaid balance.
Also, keep an eye out for “Letter 6419” from the IRS, because it should explain how much money you’ve already received with this program. The maximum credit any household can get per child under 5 years old is $3,600 in total, while the maximum credit for U.S. families with children between 6 and 17 years old is $3,000.
Also, unlike with the stimulus check, the IRS requires you to reconcile any overpayment. Basically, if your income situation has improved in 2021, or if you claimed fewer dependents than the IRS knew about, you’ll have to pay back the overpaid child tax credit.
In 2021, nearly 24 million citizens have applied for jobless benefits, which is nearly 15% of the labor force. State unemployment agencies were also paying out an extra $300 every week up until September.
For 2021, all this counts as taxable income, unlike the year before, where the first $10,400 of those payments were tax-exempt. The point is that if you received any benefits last year, you’re subject to full taxation.
Keep reading for some important dates you need to know!