Your family is the center of your world, and during tax season it’s essential to understand available credits when filing your taxes. Katelynn White with Northside Tax Service discusses what can help families receive their full benefits when filing in 2022.
Child Tax Credit
Per the American Rescue Plan of 2021, advance payments on the child tax credit were given monthly to eligible taxpayers.
“The advanced child tax credit was distributed throughout the year for up to half of the amount that families normally would receive at the end of the year when they file their taxes,” says White. “For children five years-old and younger, the credit is up to $3,600 per child and, from ages 6-17, the credit is up to $3,000 per child. The advance credit totaled half that amount split into equal payments.”
Families received letters in the mail from the IRS (Letter 6419) explaining this benefit and how much they received over the year. “If families were married filing jointly throughout the year, then the amount that was received will be split into two letters,” says White, “In case something changed on this year’s tax return, they would each have a letter stating how much they received.”
Child and Dependent Care Credit
Childcare is especially hard on a family’s finances and with the help of the child and dependent care credit, some of those expenses can be paid for. This year, the credit looks a little different.
“Expenses for the dependent care credit increased to $8,000 per child, up from $3,000,” says White. “For two or more children, you can claim up to $16,000 total in expenses, 50% of which you can take as a deduction on your tax return.”
The credit also has the possibility of being refundable and available to those who don’t necessarily owe taxes, in the event they meet the criteria.
Earned Income Tax
For low-income taxpayers, the Earned Income Tax Credit can help ease financial burden by providing a tax break.
“Prior to this year, taxpayers had to be between 25 and 65 years old to qualify for the EITC depending on your income level,” White says. “This year they dropped that down to 19 years old and there isn’t a maximum age to qualify for the income credit.”
Note: Claiming this credit may delay your tax return.
Tips for Taxpayers
Before filing your taxes, remember to collect all important documents and information you’ve received throughout the year, including the Advance Child Tax Credit Letter 6419 and your Third Economic Impact Payment Letter 6475. Tangible proof of these payments must be presented to your taxpayer.
“It’s extremely helpful to have these letters when filing your taxes but you can do it without the letter if you can look back at your bank records,” says White. “When you file your taxes, you have to reconcile out how much you’ve received. It’s not taxable, but you need to make sure you’ve received the correct amount.”
For those who added a dependent to their families in 2021, it is especially important to verify benefits you have yet to receive.
“With the child tax credit, a lot of people sometimes aren’t sure whether they received the payments or not,” White says. “Looking out for those letters is always helpful, especially for us, so we know who received what amount. We want to make sure they receive all that they deserve.”
White also reminds taxpayers still waiting on their 2020 return to file this year on time and get their return in the queue with the IRS.
In 2022, it’s especially necessary for taxpayers to get details accurate on their filings. Northside Tax Service provides competent assistance for local taxpayers, dedicating their business to community and accuracy.
“We have tax preparers here who have 20 years of experience and know all the ins and outs,” says White. “Especially with all of the child tax credit and deductions you can take with having children, a lot of people may not realize all the small changes of the care credit and CTC. We can go through and make sure you’re getting all the deductions and credits possible, especially with children, since there are so many rules regarding them.”
For those considering a new tax preparer, Northside is offering a free consultation and percentage off services for new clients.
“If anyone has questions or isn’t sure what they should do about their tax situation, this year we’re offering new clients 20% off and a free tax planning session with us, to make sure they’re in the right direction for next year,” White says. “As people have children and buy houses, it just gets more and more complicated and there’s more you need to keep track of, like mortgage statements and daycare costs. Working with a tax professional can help make your life easier as your tax situation gets more complicated.”
Consider Northside to help make your tax season a breeze — now, and in the future.
Northside Tax Service is located at 1530 Birchwood Avenue Suite D in Bellingham. They are open 9 a.m. to 7 p.m. Mondays to Saturdays, and 11 a.m. to 5 p.m. on Sundays. For more, please check their website or call 360.922.0235.
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