The 2023 tax filing deadline is April 18, 2023, on Tuesday. The process of getting ready for tax season can occasionally seem overwhelming. However, the following information will help you maximize your tax refund this year.
Child Tax Credit (CTC)
The Kid Tax Credit, worth up to $2,000 per qualified child, assists with the expenditures associated with raising children. You can get up to $1,500 back in your tax refund if you don’t owe taxes or if your credit is greater than the taxes you owe. To receive a CTC refund, also known as the ACTC, in 2022, you MUST have AT LEAST $2,500 in earned income.
The CTC can be claimed by you and your spouse (if you have one) using either your Social Security number (SSN) or Individual Taxpayer Identification Number (ITIN) (ITIN). Your claimed children for the credit must possess an SSN.
Earned Income Tax Credit (EITC)
The EITC is a tax benefit that could lessen your federal tax liability or give you money back at tax time. You might qualify for this credit whether you’re single or married or have kids. The primary prerequisite is that you must have a job that pays money.
A credit of up to $560 is available to those not raising children at home. Furthermore, many qualified families with children will receive a bigger EITC. The credit’s maximum value is $6,935 when you submit your taxes in 2023.
Child and Dependent Care Tax Credit (CDCTC)
The CDCTC is a tax credit that aids families in covering childcare costs required for employment or job-seeking. Families may also utilize this credit to cover the cost of caring for an adult-dependent or an incapacitated spouse who cannot care for themselves. The amount of taxes you owe may be reduced even if this credit is NOT refundable.
You must know how much you spent on childcare in 2022 to qualify for the credit. You can consult your bank account statements, receipts, or other records showing how much money you spent. For one qualifying person, the distinction is worth a maximum of $1,050, and for two or more, it is worth a maximum of $2,100. For one qualifying person, you may deduct qualified expenses up to $3,000; for two or more, you may deduct qualified expenses up to $6,000.
Unemployment Benefits and Form 1099-G
By the end of January 2023, if you applied for unemployment benefits in 2022, your state unemployment office should have sent you Form 1099-G, Certain Government Payments. The total amount of unemployment benefits you have received and any state and federal taxes you withheld are listed on your Form 1099-G.
You must include your unemployment on your federal tax return since unemployment payments are regarded as taxable income.
If you got a Form 1099-G but didn’t apply for unemployment benefits, you can be a victim of fraud and identity theft. Get in touch with your state’s unemployment agency to report and resolve this problem.
How to protect your identity while filing taxes.
It can be challenging to navigate the tax filing process, particularly with the rise of tax-related scams. These con games include phony IRS phone calls, texts, or emails and identity theft for unemployment benefits.
Registering for an IRS Identity Protection PIN is one approach to safeguard your family and yourself from tax-related scams (IP PIN). A six-digit number known only by you and the IRS called an IP PIN can stop someone from using your Social Security number to file a tax return (SSN). In addition, you can still obtain an IP PIN if you complete a tax return to claim credits you are entitled to but are not compelled to do so. You can get an IP PIN quickly through your IRS Online account. Use this detailed tutorial to establish an account if you still need to get one.
Be on the lookout for IRS impersonation scams as well. Please be aware that the IRS WILL NOT approach you via social media, text messages, or emails to obtain sensitive information (like your SSN or bank account details). The U.S. Postal Service will always use regular mail to reach out to you first.
You can report phishing emails to [email protected] if you ever get one claiming to be from the IRS. This FAQ outlines the actions you can take if you are unsure of a person’s identification who is posing as an IRS representative.
Filing taxes with an Individual Taxpayer Identification Number (ITIN)
People who must have a U.S. taxpayer identification number but need a Social Security number or are not qualified for one can obtain an ITIN (SSN). You can file taxes and apply for any tax credits you are entitled to with an ITIN.
You must submit IRS Form W-7, Application for IRS Individual Taxpayer Identification Number, your finished tax return, and supporting paperwork to prove your identity and foreign residency to apply for an ITIN. This checklist can be used to assist you in completing your ITIN application.
Missed out on tax credits from previous years?
The government passed significant short-term enhancements of tax credits for 2021 in response to the COVID-19 epidemic. This indicates that more people were qualified to get larger tax refunds. However, it’s still possible if you qualified for the 2021 tax credit enhancements but did not use them. These are the key points:
Child and Dependent Care Credit (CDCTC): Key changes to this credit for tax year 2021 only include:
- We have increased the credit’s size to $3,000 for children aged 6 to 17 and $3,600 for children under 6.
- Removed the prerequisite of a minimum income. This means you can still qualify for the credit even if you don’t have a job-related source of income.
- You have created a 100% refundable credit. You can receive the entire amount as a refund if you do not owe any taxes.
Earned Income Tax Credit (EITC): For workers with children residing with them, the 2021 Expanded EITC is valued at up to $6,728. EITC for workers not caring for children at home has undergone significant expansions, which include:
- Workers qualified to claim this credit must be 19 years or older, six, and between the ages of 25 and 64. In addition, youth who are homeless and former foster youth 18 years old or older are also eligible.
- To reach $1,502, the credit amount has nearly tripled.
- Additionally, the EITC has a “lookback” clause that enables anyone who qualifies to choose to use their 2019 earnings rather than their 2021 earnings if doing so will result in a more significant credit.
Credit for Child and Dependent Care (CDCTC): Important modifications to this credit for the tax year 2021 alone include:
- The credit can be refunded in full. This means that even if you don’t owe taxes, glory may be able to give you a tax refund.
- For one qualifying person, the credit is worth up to $4,000, and for two or more, it is worth up to $8,000.
- For one qualifying person and two or more qualifying individuals, the number of qualified expenses increased to $8,000 and up to $16,000, respectively.
Congress authorized three rounds of stimulus money for ongoing COVID relief. If needed, you can claim the remaining stimulus money as the Recovery Rebate Credit. For the first two stimulus payments, you must file a 2020 tax return; for the third stimulus payment, you must file a 2021 tax return.
You may have been entitled to some of these credits but have yet to receive them. Not to worry! When you submit a tax return for a previous year, you can still claim them. Federal tax returns for 2021 must be submitted by April 18, 2025. (By May 17, 2024, you must submit a 2020 tax return.)
There is no penalty for submitting taxes after the April deadline if you were not compelled to do so. If you were obligated to submit taxes but missed the deadline, you may be able to reduce the amount of penalties you may owe by filing your taxes late (and collecting any credits you are entitled to).
If you need assistance filing a past-due tax return, contact GetYourRefund.org or one of your local Volunteer Income Tax Assistance (VITA) locations. Sites run by volunteers with IRS certification are free to use. To find out if your local VITA facility can submit tax returns from earlier years, get in touch with them ahead of time.
Learn more: 4 Effective Strategies to Reduce Your Income Taxes