Best Tax Credits for Parents & Families to Take Advantage of for 2022 Tax Filings
Tax season is upon us and many families, struggling with high inflation, are looking for tax credits and tax breaks to help their families. There is a long list of tax credits you may qualify for. Below, we have highlighted some of the most helpful!
Changes to the Child Tax Credit
In 2021, President Biden signed the American Rescue Plan, and with it the One-Year Child Tax Credit Expansion, into law. The tax credit increased the credit to $3,000 per child ($3,600 per child under age 6) for many families. It made the credit fully refundable for families who lived in the U.S. for more than six months during 2021 and removed the $2,500 earnings floor. And it required half of the credit to be paid in advance by having the IRS send monthly payments to families from July 2021 to December 2021.
Unfortunately, Republicans and Senator Manchin let Biden’s one-year child tax credit expire at the end of 2021. Now families applying for the credit can only get up to $2,000 per child under the age of 17. And it is only partially refundable, which means that if the credit exceeds the amount of taxes you owe, you can receive a refund for the difference.
You can claim the Child Tax Credit by entering your children and other dependents on Form 1040, U.S. Individual Income Tax Return, and attaching a completed Schedule 8812, Credits for Qualifying Children and Other Dependents.
Child Care Credit
This credit can be worth up to 35% of the cost of child care, summer camp, or dependent care expenses, up to a maximum of $3,000 for one child or $6,000 for two or more children. The credit for child and dependent care expenses is nonrefundable, meaning the credit can't be used to increase your tax refund or to create a tax refund when you wouldn't have already had one.
Families must file a federal income tax return and submit Form 2441, “Child and Dependent Care Expenses.”
Earned Income Credit
This credit is designed to help low- and moderate-income taxpayers. The amount of the credit depends on your income and the number of children you have. Determine if you qualify with this quick survey.
This credit can be worth up to $14,440 for qualified adoption expenses. If you make under $223,410, you should qualify for the entire complete credit. Learn how to submit Form 8839 to take advantage of this tax credit.