Tax refunds may be smaller in 2022 for some.
Many people are beginning to gather their paperwork to begin completing their tax returns. However, tax refunds may be smaller this year for some filers.
What will affect my tax refund in 2022?
Child tax credit payments
The American Rescue Plan increased the child tax credit from $2000 per child to $3,000 or $3,600 per child. Children ages 0-5 qualified for $3,600, while those ages 6-17 qualified for $3,000.
Payments were sent once a month beginning on July 15, 2021. Parents received payments of $250 or $300 per child each month.
These child tax credit payments were based on their 2020 taxes and was an advance on their 2021 tax refunds.
Parents who saw an increase in their income in 2021 might owe money on their tax return this year.
Those who typically owe money on their taxes but received the CTC payments, may also find themselves owing more money this year,
However, parents who had a new child in 2021 may receive more money in their refund.
If parents received child tax credit payments, then they should expect to receive Letter 6419 in their mail in late January. Make sure to wait to file taxes until after receiving these forms.
Third stimulus checks
Those that never received their third stimulus check in early 2021 might be eligible for the Recovery Rebate Credit with their refund. Be on the lookout for Letter 6475 from the IRS in the mail in January.
Student loan interest
Student loan payments and interest charges have been paused until May, 1, 2022.
Because student loan payments and interest rates were paused during 2021, those that usually deduct their student loan interest may find their refund reflecting this change.
Keep up to date with the news updates from the IRS.