As the deadline to submit your 2021 tax return or extension inches closer, it’s natural to feel a sense of urgency. However, with careful planning and attention to eligible tax credits, you may end up in a favorable position — possibly with a tax refund! Here are three pivotal insights on the 2022 tax credits that can help you navigate this tax season smoothly.
Harness Your Individual and Family Credits
One of the significant tax benefits for families in 2022 has been the expanded Child Tax Credit. If you’ve received child tax credit payments from July to December, remember to claim the remainder of your credit while filing your taxes.
There are scenarios where individuals didn’t receive these monthly payments, either due to choosing not to or because they don’t typically file taxes. If this describes your situation, don’t worry. You’re eligible to receive the full IRS child tax credit when you file your taxes.
For those who welcomed a new member in the family in 2021, remember to file your taxes this year to claim the 2022 child tax credit.
Let’s also shine a light on an often-overlooked tax credit: the Electric Vehicle or EV tax credit. If you’ve made the eco-friendly choice of purchasing a battery or electric plug-in hybrid vehicle, you might be eligible for a substantial tax credit, potentially worth up to $7,500!
Utilize Your Business Tax Credits
While a lot of attention is given to family and child tax credits, tax credits available for businesses should not be ignored. These credits can provide significant financial relief for your business, but only if you remember to claim them.
The Employee Retention Tax Credit (ERTC) was a lifeline for numerous businesses, enabling them to retain their employees despite financial difficulties caused by the pandemic. If your business was financially impacted, you might be eligible for a refundable credit of up to 50% on $10,000 in paid wages.
While the ERTC deadline has passed for most businesses, recovery startup businesses can still claim the ERTC. Moreover, certain employers may still file a claim for previous quarters by submitting the appropriate forms.
Prior Preparation is Key
To leverage these tax credits fully, you may need to undertake certain preparatory steps when filing your tax returns, primarily revolving around document collection.
For instance, ensure that the total amount of advance payments you received for the child tax credit is accurately reflected in IRS Letter 6419, which should have been received by mid-March 2022.
Furthermore, IRS Letter 6575 provides information about the third stimulus payment. If you did not receive the full amount in your stimulus checks, you can claim the remainder when filing your return. However, this letter is essential to verify the amount.
The past two years witnessed extended tax filing seasons due to the pandemic. However, this year, ensure your tax return and all necessary documents are ready by the deadline.
Remember, this year’s deadline, April 18, deviates from the traditional April 15 due to the weekend.
It may seem tempting to skip filing your tax return, especially if you had minimal or no income. However, to claim these or any other tax credits, filing a return is a must.
Conclusion: Leverage 2022 Tax Credits to Your Benefit
When you’re preparing your tax return this spring, ensure to claim all eligible 2022 tax credits. These credits can provide significant savings on your return, provided you adhere to all deadlines and guidelines.
If you found this article insightful, we invite you to explore our other finance-related pieces. Stay informed, and make this tax season work to your advantage!