Certain child and dependent tax credits have been cut, and the charitable deduction that some taxpayers took advantage of during the epidemic years is no longer as simple to claim.

The IRS began taking tax returns in late January, and if you were hoping for a larger tax refund—or, at the very least, a lower tax bill—in the new year, several tax law changes affecting the upcoming 2022 tax year filing season may dampen your expectations.

To begin with, certain tax benefits for children and dependents have been cut, and the charitable deduction that some taxpayers used during the pandemic years is no longer as simple to claim.

Tax Credits Have Been Reduced

The child tax credit and the credit for dependent care expenses have both been lowered for 2022, eliminating the increases they obtained under the American Rescue Plan Act of 2021. This could be one of the reasons you receive a smaller tax refund or a higher tax bill.

The child tax credit, for instance, provided up to $3,600 for each eligible child in 2021. The child tax credit will be reinstated at its prior level of up to $2,000 per eligible child for the 2022 tax year.

The child and dependent care tax credit, which assists certain taxpayers in defraying the costs of caring for children, guardians, or disabled dependents (for example, paying for daycare, babysitters, summer camps, or other care providers), has also been cut. For one qualifying person in 2021, or for two or more qualifying dependents, up to $16,000, the credit was available for qualifying care costs. The credit will only be available for the 2022 tax year if you spend up to $3,000 on qualifying care for one qualified dependent or $6,000 on qualifying care for two or more qualifying dependents.

Charity Transformation

The ability to claim a charitable deduction will be more challenging than in previous tax years, which could also have an influence on your tax return or payment. Congress helped charitable organizations and their donors by enabling single donors to deduct up to $300 in cash donations or up to $600 for married couples filing jointly without itemizing their deductions last year. For the 2022 tax year, this deduction was not renewed, so taxpayers who wish to take advantage of their charitable contributions in 2022 must itemize their deductions. Only if itemized deductions for the 2022 tax year total more than $12,950 for single taxpayers, $25,900 for joint filers, $19,400 for heads of household, or $25,900 for married couples filing separately, may this be done. A standard deduction increase of $1,750 for taxpayers who are at least 65 years old or blind, or an increase of $1,400 for married couples filing jointly, may be claimed.

The tax laws are very complex. Our short blog articles cannot cover in full all the nuances of the rules. Your specific facts may hold various opportunities and possible risks that only trained, experienced, and highly qualified tax specialists can spot. We encourage you to find such help, rather than trying to figure it all out on your own.

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