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IRS halts COVID-19 tax credits: Here is your current claimable amount

The COVID-19 pandemic resulted in numerous modifications to federal tax credits that assisted families in meeting their financial obligations.

The pandemic of COVID-19 is now less severe. The IRS has terminated several coronavirus tax credits. The majority of tax credits have returned to 2019 levels, meaning taxpayers will receive a smaller refund this year. It is crucial for taxpayers to comprehend.

Changes To Coronavirus Tax Credits

In 2021, many households would have gotten a child tax credit of $3,600 per child under the age of five and $3,000 per child between the ages of six and seventeen. 

Now that coronavirus tax credits have been eliminated, families will only receive a $2,000 credit per child. In addition, the eligibility age for the child tax credit returns to 16 years old for the 2022 tax year.

During 2022, no more Advanced Child Tax Credits were awarded. Thus, taxpayers with children under 17 could receive a larger credit on their 2022 tax return compared to their 2021 return.

Additionally, the Earned Income Tax Credit (EITC) will return to its pre-COVID-19 level. In 2021, eligible taxpayers without children would have earned a $1,500 EITC increase. In 2022, the credit amount returns to $500.

The Child and Dependent Care Credit decreases from $8,000 in 2021 to $2,100 in 2022.

In addition to modifications to coronavirus tax credits, the IRS has announced other adjustments for the 2022 tax year, including a reduction in the above-the-line charitable deductions, which were $300 per single taxpayer and $600 per joint return. In 2022, taxpayers must itemize to obtain these deductions.

The deadline for filing and paying federal tax returns year 2022 is April 18, 2023. This means that taxpayers will have a few extra days to file their returns this year.

Read more: Claiming your Social Security benefits at 62? Here’s how to get your money earlier!

Why Will There Be Smaller Refunds This Year?

IRS-COVID-19-Tax-Finance-US News
The COVID-19 pandemic resulted in numerous modifications to federal tax credits that assisted families in meeting their financial obligations.

Due to the modifications made to these coronavirus tax credits, this year’s average tax refund will be smaller than in previous years. The absence of federal stimulus checks tied to COVID-19 in 2022 is also a significant factor in this year’s reduced tax refunds.

Although the majority of taxpayers received these credits and stimulus funds automatically, many of those did not claim them when filing their tax returns last year.  Given that there are no such credits or stimulus payments to be claimed this year, the refund is expected to be lower.

According to the IRS, the average tax refund in 2018 was approximately $3,200, compared to approximately $2,800 in 2021. Tax experts said this year’s refunds could be reduced by a few hundred to a few thousand dollars, depending on the taxpayer’s circumstances, similar to 2019 and 2020.

Read more: Social Security Number: Is it possible to change the digit of your account?

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