In 2022, many tax filers will be pleasantly surprised to find that their tax refunds will be higher than they were in 2021. While some people will be collecting new or enhanced credits that were approved by the government, others may be eligible to receive tax credits they once weren't eligible to claim.
If you’re looking to get a higher tax refund in 2022, consider claiming these credits, when applicable.
Many parents can get a higher tax refund thanks to the larger child tax credits being issued.
One credit that may raise your 2022 tax refund is the enhanced CTC (child tax credit). In the past, filers could only collect $2,000 per child, up to the age of 16. However, on your 2021 tax return, you’re able to claim $3,600 per child (under the age of 6) and $3,000 per child (ages 6-17). Not only did the CTC receive an enhancement, but the age limit was also extended to 17.
If you collected half of the CTC credit in monthly installments between July and December 2021, you’re only entitled to collect the remaining half. This will either be $1,800 or $1,500 depending on the age of your child. If you opted out of receiving payments or had a child in 2021, your refund should include the full credit amount.
Did you pay for childcare expenses in 2021? If so, your 2022 tax refund could get a boost.
If you paid for childcare expenses while you worked or actively looked for work in 2021, then your tax refund should include an enhanced child and dependent care credit. The American Rescue Act was generous to the American people and it dramatically increased this credit amount.
Instead of receiving up to $3,000 per qualifying dependent, or $6,000 for two or more qualifying dependents, you can now claim up to $4,000 per person, or a maximum of $8,000 for two or more dependents.
The EITC (Earned Income Tax Credit) can also help raise tax filers refunds in 2022.
If you filed a joint tax return with your spouse, had one qualifying dependent, and your AGI (adjusted gross income) was $48,108 or less in 2021, you might be entitled to receive an EITC of $3,618.
The EITC is a credit that reduces your taxable income (or increases your refund amount) but is only issued to filers who meet certain criteria. Your income, number of dependents, and filing status are all used to determine the eligibility status and credit amount.
The recovery rebate credit can also be used to raise your tax refund in 2022.
The American Rescue Plan Act of 2021 called for a third round of stimulus payments to be issued to qualifying individuals. The IRS issued $1,400 checks to most eligible individuals or $2,800 to couples. If you had any qualifying dependents in 2021, you should have also collected $1,400 for them as well.
If you didn’t receive your third stimulus payment or got less than the full amount, the tax software you use should assist you with applying this credit to your taxes. This may either reduce your tax liability or increase your refund amount.
Charitable contributions may also allow you to collect a higher tax refund.
If you made charitable contributions in 2021, your tax refund could be higher. If you're someone who doesn’t itemize and takes the standard deduction, which most taxpayers do, the IRS will let you claim the following:
- Up to $300 for cash contributions if you file your return individually or use the married filing separately status.
- Up to $600 for couples who file joint returns.
If you don't itemize and you include cash contributions on your 2021 tax return, then the IRS may allow you to deduct anywhere from 20 percent to 60 percent of your adjusted gross income. The type of contribution that was made along with the type of charitable organization is what the IRS uses to determine your limit.
If you want a larger tax refund in 2022, remember to consider all of the tax credits that are available to be claimed. With a little research and the help of a tax expert, you could raise your refund dramatically.