Substantial Tax Benefits Available in 2022

Prepared by the Office of Danny K. Davis

Congress included substantial tax credits for 2022 as part of the American Rescue Plan enacted last year. Importantly, thousands of dollars in credits are available to eligible low-income workers and parents even if they do not owe any federal taxes. I fought for these benefits, and I need your help getting the word out so that people get every penny for which they’re eligible.

It is worth the time to file.

For individual workers without kids, the maximum Earned Income Tax Credit (EITC) is $1,502. For a working parent, the maximum EITC is $3,618 (1 child), $5,980 (2 kids), or $6,728 (3+ kids). The EITC is available if you earn just $1 and whether you work full-time, part-time, as an employee, as a contractor, or are paid in cash. This year, workers as young as 19 and older workers of any age are eligible. Also, foster/homeless youth are eligible at age 18 or as full-time students under age 24.

For parents, the Child Tax Credit provides $3,600per child aged 0-5 and $3,000per child aged 6-17.

For working parent paying childcare, the Child and Dependent Care Tax Credit pays up to $4,000 (for a max of $8,000 in costs) for 1 child or up to $8,000 (for a max of $16,000 in costs) for 2+ children.

For education and job training, the American Opportunity Tax Credit gives up to $2,500 per student per year for tuition, fees, and course materials for up to 4 years or the Lifetime Learning Credit is up to $2,000 a year.

Tax Tips.

File electronically so that the IRS can process your return and refund as quickly as possible.

Use direct deposit to get your refund quickly.

Check your numbers for accuracy. If your numbers do not match your receipts, your tax documents, or what the IRS has in its records, it can delay processing your return and your refund by months. For example, use the correct dollar amount for what you received for the advanced Child Tax Credit or the Economic Impact Payment. If you are not sure, look at your online account or any letters from the IRS (Letter 6419 for advance CTC payments; letter 6475 for Economic Impact Payments). https://www.irs.gov/payments/your-online-account

If your 2020 tax return is still in processing, enter $0 for last year’s Adjusted Gross Income (AGI) when you file electronically for 2021.

If you used the IRS Non-Filer Sign Up tool in 2021 to register for the Child Tax Credits or Economic Impact Payments, enter $1 for last year’s Adjusted Gross Income (AGI).

Resources from Davis Virtual Events on 3/8/22 and 3/16/22 to Help Foster Youth, Homeless Youth, and Caregivers Maximize Their Tax Credits

Resources from Ladder Up in Chicago

Ladder Up – Free Tax Prep Checklist

Ladder Up – ITIN Application and Renewal Assistance

Ladder Up – eTap, Electronic Tax Assistance Program

Event Presentation Slides

Resources for Foster/Homeless Youth Provided by John Burton Advocates from Youth

JBAY General Tax Filing Resources

https://jbay.org/resources/tax-filing-tax-credits-informational-resources/

JBAY How Tax Filing Benefits Foster Youth

https://jbay.org/resources/tax-filing-benefits-fy-national/

JBAY Tax Prep Checklist for Transition Age Youth

https://jbay.org/resources/tax-prep-checklist-for-tay-national/

JBAY Tax Credits Put Money in Your Pocket

https://jbay.org/resources/tax-filing-national/

Resources from the IRS and Taxpayer Advocate Service

IRS Get Ready to File Brochure

IRS Child-Related 2021 Tax Credits

**Clarification re Question re the Effect of Immigration Status on Taxes: for taxpayers claiming the credit for other dependents—the credit for other dependents is a non-refundable credit (meaning it reduces a taxpayer’s tax amount owed). In order to claim the credit, the dependent needs to be a U.S. Citizen, a U.S. National, or a resident alien. The dependent must have a Social Security number or an individual taxpayer identification number (ITIN). The dependent must live with the taxpayer for more than 6 months of the year as well as the taxpayer providing more than half of the dependents financial support for the year in order to qualify for the credit.

Useful Tax Resources

Helpful Information and Filing Tools

IRS Flier Comparing Key Child-Related 2021 Tax Credits

IRS Tax Preparation Check List – One Page

IRS Tax Preparation Check List – Three Pages

Ladder Up – Free Tax Prep Checklist

Ladder Up – ITIN Application and Renewal Assistance

Ladder Up – eTap, Electronic Tax Assistance Program

File for Free

IRS Free File. If taxpayers earned less than $73,000, they can use Free File Program.

https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free

Volunteer Income Tax Assistance (VITA) Program. VITA sites provide free, in-person tax preparation if your income is less than 58,000 or if you have disability or limited English-language proficiency.

https://www.irs.gov/individuals/find-a-location-for-free-tax-prep