COLUMBUS, Ohio — Families across the country can expect a frugal tax season this year, with some tax credits returning to 2019 levels.
In 2021, families received up to $3,600 per dependent for the Child Tax Credit, and now they’ll only get $2,000 if eligible. Changes are also being applied to the Earned Income Tax Credit. Those eligible with no children will only receive $500 compared to the $1,500 in 2021.
Lastly, the Child and Dependent Care Credit returns to a maximum of $2,000 instead of the previous $8,000.
Fikru Nigusse, who is a tax expert in Central Ohio, said this can have a huge impact on families who were looking to use the money for every day expenses.
“We’re expecting that if you spend this kind of money on child care and child independent care, it doesn’t look good for them,” said Nigusse.
All of the changes seen in 2021 were a result of president Joe Biden’s American Rescue Plan. The plan was only in effect for a year. Tom O’Saben, with the National Association of Tax Professionals said the return to pre-pandemic levels could be a result of bipartisanship.
“It was left on the cutting room floor as a bargaining chip to get a deal done,” said O’Saben. “When this enhancement was brought out in 2021 after president Biden became president it was to still help people who were still reeling from covid.”
In 2021, most of the tax credits were refundable even if you paid or withheld no to little tax, but now that it is nonrefundable and credit amounts have decreased, many can now owe the IRS as a result. O’Saben the best thing you can do is check your withholdings, and if you do owe to work with the IRS.
“Don’t ignore the debt work with the IRS to get it settled,” said O’Saben. “People could have a rude awakening this year like I said, the perfect storm. Lower withholdings. Lower credits.”
Tax filing will end April 28.
