For the 2022 tax year, the earned income credit ranges from $560 to $6,935 depending on filing status and number of children. This refundable credit was created in 1975 to help lower-income workers offset the Social Security payroll tax and rising food and energy prices, but was made permanent in 1978 “as both an anti-poverty program and an alternative to welfare because it incentivized work,” according to the Economic Policy Institute. A qualifying taxpayer with no children who received about $1,500 in 2021 would now only receive $560, according to IRS figures. The earned-income tax credit, available to low- and moderate-income workers, is another refund that was expanded because of the pandemic and set to decrease this tax season. Parents and guardians qualify for this tax break if they paid a daycare center, babysitter, summer camp or other care provider for children under the age of 13 or a disabled dependent of any age. In addition, the child and dependent care credit, available to parents and those who need care for family members while they work, returned to a maximum of $2,100, down from $8,000 in 2021. Children must be under the age of 17 to qualify, and the credit gets reduced for families with a modified adjusted gross income above $400,000 on a joint return or $200,000 on a single or head-of-household return. As a result of the change, a family with three young children that would have received as much as $10,800 in 2021 would get at most $6,000 in 2022. More than 36 million families with about 61 million children benefited, though the credit has returned to a maximum of $2,000 per child for eligible families in 2022. The child tax credit, available to working parents who meet certain income and other rules, provided as much as $3,600 per child in 2021. But those changes were just temporary, and Congress did not vote to make the benefits permanent, meaning the credits reverted back to pre-pandemic levels for 2022. Two years ago, the federal government expanded several tax credits for 2021 to help support families through the financial hardships during the COVID-19 pandemic, when many Americans were out of work. Here’s what to know at the start of this tax season.
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