SPARTANBURG, S.C. (WSPA) – Tax season has officially begun and while that may not excite most Americans, this year tax payers might be pleasantly surprised.
Changes to the tax law could mean your refund is a lot bigger than expected.
Here are the top three changes that could really enlarge your refund, if you qualify.
- Did you have a baby in 2021?
Dana Hale became a new mom in 2021, giving birth to her daughter, Vivianne. Instead of daycare, Vivanne’s dad left work a few months back to care for her full time.
“Our budget pre-child and post child is very different. There was a lot more restaurants and a lot more take out pre-child and now it’s filled with diapers and formula,” said Hale.
While going from two incomes to one means a tighter budget, Hale was surprised to hear she may have a hefty refund this year.
Her baby qualifies for a $1,400 stimulus payment, $1,800 from the advanced child tax credit (remember those $250-$300) monthly payments parents got for 6 months in 2021) plus another $2000 from the existing child tax credit. That’s a whopping $5,200.
IRS Enrolled Agent Dan Thomas said it doesn’t stop there. He said more credits are refundable this year than ever before. Previously they had only served to reduce a tax burden, but now they extend further to give money back to the taxpayer. And that means some hefty refunds, especially for people with children. Thomas said some of his clients are getting refunds as large as $15,000.
“Oh yeah, it’s easy. We have a lot of people getting way up into the 5 digits,” said Thomas.
The Jackson Hewitt tax preparer in Forest City, N.C., said in his 30 years he’s never seen anything quite like this. And he said to take full advantage of it, you need a lot more paperwork.
“There’s so much information that a taxpayer needs in order to correctly complete their tax return and not be held up while the IRS verifies their information that’s on the return,” said Thomas.
- Dependent Care Credit:
Thomas said another big change is for people like Rachel Graeber who have children in daycare.
“It’s like a quarter of our monthly expenses goes to childcare at least for the first 5 years before they actually go into school,” said Graeber in Greenville.
Uncle Sam is now giving these families a break by making the Dependent Care Credit (which is also used for families caring for an elderly or vulnerable adult) refundable also.
“In other words, it’s more money coming back in a refund,” said Thomas.
“So hopefully this will make us be in the green for a refund,” said Graeber.
- Child Tax Credit
And let’s not overlook another big change, the Child Tax Credit.
The $2000 per child tax credit will go further because, you guessed it, that, too, is also now refundable.
To be clear, this $2000 per child is on top of those monthly $200-$300 payments parents got for the Advanced Child Tax Credit.
Note: Families should look for a letter in the mail from the IRS telling you exactly how much you received in the Advanced Child Tax Credit. If you’re married and filing jointly, you’re going to get two of those letters, one for the wife and one for the husband. It is very important to make sure the IRS has your correct address.
Hale, whose birthday happens to be on Tax Day or April 15, has never loved doing taxes, but she said this year is certainly a welcome change of pace.
“I’m like this is great. I was expecting to owe money, and now we may be getting money back so I’m very excited about that,” said Hale.
A Few More Things:
Now, it’s not just people with kids that will benefit from tax changes.
The standard deduction has gone up slightly from last year to $12,550 for single filers and $25,100 for married filing jointly.
Also, low-income individuals who get Earned Income Credit will see that money tripled from around $500 to $1500.
And one more thing to note, especially with bigger refunds expected, you’ll want to file as early as you can to prevent identity thieves from claiming your refund.
