Tax Season Tips & Updates
Washington, February 23, 2022
Tax season is upon us again, and over the past year, I have heard from you, my constituents, that you continue to experience financial difficulties due to the COVID-19 pandemic. Therefore, I am proud to share several federal policy changes for tax season 2021 that will benefit taxpayers. Here’s a brief overview of what you need to know:
2021 Recovery Rebate Credit
If you did not receive the third Economic Impact Payment or received less than the full amount, you may be eligible to claim the 2021 Recovery Rebate Credit. Click here to learn more.
Advance Child Tax Credit
In the American Rescue Plan, which was passed in March 2021, we created the Advance Child Tax Credit payments, lifting millions of American children out of poverty. The ARP bumped the already-existing Child Tax Credit from $2,000 to $3,600 for each child under age six and $3,000 for children ages 6-17. It also provided a $3,000 credit for 17-year-olds. Through the new advance payments, the IRS disbursed half of the 2021 Child Tax Credit in monthly installments to families beginning in July 2021. The other half will be distributed as part of a recipient’s tax refund. Click here to learn more.
The Earned Income Tax Credit
The income threshold for the Earned Income Tax Credit (EITC) has increased for single filers with no children, so you may be eligible this year even if your income was just above the limit in tax season 2020. Additionally, unlike in previous years, taxpayers can now claim the EITC as a married filing separately if they meet other qualifications. Click here to learn more about the changes to the EITC.
Child and Dependent Care Credit
The Child and Dependent Care Credit is a federal tax benefit that helps families pay expenses for childcare needed for the caregivers to work or to look for work actively. The credit is also available to families with expenses related to the care of an incapacitated spouse or an adult dependent. For the first time, the Child and Dependent Care Credit is fully refundable for tax year 2021, which means the credit can provide money back even if you don’t owe taxes. Additionally, the amount of allowable credit has increased substantially this year. In the past, taxpayers were capped at $3,000 for childcare expenses for one dependent and $6,000 for two dependents. For tax year 2021, the amount is $8,000 for one dependent child and $16,000 for two dependents. Click here to learn more.
If you accumulated substantial medical bills last year, you might be able to find some tax relief. For tax year 2021, you can deduct any medical expenses above 7.5% of your AGI if you itemize your deductions. Click here to learn more.
How to Get Help
If you need help filing your 2021 return, there are many filing resources available to you at no cost, such as the IRS Free File program, Volunteer Income Tax Assistance Program, and Tax Counseling for the Elderly program. Click here to learn more.
I have also heard from many of my constituents that have concerns about data privacy, especially as many common scams target taxpayers during this time of year. Click here to learn how to keep your data safe, prevent identity theft, and where to get help if you think you may be the victim of identity theft.
As always, my constituent services team is here to help you. You can submit a request for assistance with an issue you’re experiencing with the IRS or another federal agency here.”