ROCHESTER, N.Y. (WROC) — Expiring tax changes could have a direct impact on your 2022 tax return and the size of your refund.
CPA Michelle Staebell of the New York State Society of CPAs discussed some of the key changes you should know about Thursday during News 8 at Sunrise.
“Some moderate taxpayers with kids at home saw huge refunds for 2021 and I want to make sure that no one expects that again for 2022 because a lot of the tax provisions for 2021 were temporary,” Staebell cautioned. “They were not extended. We will not see them as far as we know for 2022.”
The first key changes relate to the Child Tax Credit.
“Because of COVID and President Biden coming into office – he expanded the Child Tax Credit,” Staebell explained. “He increased it to $3,000 per child under age 18 and $3,600 for children under 6. That wasn’t extended beyond 2021 so we’re back to the $2,000 per child under age 17 as far as we know. That could definitely impact people’s tax situations and lower their refunds.”
In the absence of any new action from Congress, Staebell said taxpayers with eligible children will not be receiving advanced Child Tax Credit payments this year from July to December.
“A lot of taxpayers saw money in their bank accounts from July to December last year whether they asked for it or not,” she said. “It just automatically happened and it may have helped or hurt their tax return situation because it was an advance payment of the Child Tax Credit. Either way, it ended up being kind of a headache to reconcile on the tax return but we don’t have to do it this year because we’re not going to see those payments come out to the taxpayers from July to December. There’s no reconciliation. That’s not part of the current tax law for 2022.”
The Dependent Care Credit is changing for your 2022 tax return as well.
“Dependent care is so expensive and some families saw an $8,000 credit or refund – an additional refund – on their 2021 tax returns which definitely helped offset the cost,” Staebell said. “That’s no longer the case for 2022. The maximum credit for 2022 is $2,100 which very few taxpayers see. Most taxpayers would see a $600 or $1,200 credit so do not expect several thousand dollars of credit related to dependent care for 2022.”
The changes are taking place as consumers are facing the highest inflation since the early 1980s. Stimulus payments that helped many during the onset of the pandemic have gone away as well and that will impact your tax return.
“We don’t have any more stimulus as far as we know,” said Staebell. “There have been three rounds of stimulus since the pandemic started. Two of them were reconciled on the 2020 tax return. The last one was reconciled on the 2021 tax return meaning if taxpayers didn’t receive them when they were initially sent out then they turn into a credit on the tax return. We haven’t seen any more stimulus. There’s no more reconciliation. There’s no more opportunity for additional credit as far as we know.”
All of this could change if Congress chooses to act. But for now, these are tax changes that will impact taxpayers, especially those with younger children.