by The $1.9 trillion American Rescue Plan passed by Congress in March 2021 has transformed the tax scenario for this calendar year. For the first time in history, American taxpayers are eligible to receive nearly double tax credits, in some cases, that will help them to lower their tax burden in the year 2022 and have more disposable income in their hands. Of the numerous tax changes proposed last year, the following 4 specifically stand out with the potential to increase your tax refund amount. And with the extra non-taxable money you receive from the IRS, you might finally fulfill your long-standing dream of buying a quality used car in Greenville.
1. Nearly 50% increase in Child Tax Credit
Before 2021, as a taxpayer with a dependent child, you were eligible to claim $2,000 as Child Tax Credit from the IRS if your annual income was less than $75,000 as a single filer or $150,000 filing jointly as a married couple. This year, the CTC plan has been taken under the American Rescue Plan and the tax credit has been increased to $3,000 for parents with children between the age of 6 to 17 years. And if your child is a newborn or below the age of 6 years, you can claim as much as $3,600 in Child Tax Credit. This tax benefit to eligible people is indeed huge.
2. Another near-50% hike in Child and Dependent Care Tax Credit
For the tax year 2021, you can claim 50% of the expenses you incurred for your dependent child or a family member who is physically or mentally unfit to take care of themselves alone. Previously, that percentage was capped at 35% of your expenses. With the new system in place for this tax year, the Child and Dependent Care Tax Credit limit has been increased to $4,000 per dependent family member from $1,050. For two or more dependent family members, you can claim up to $8,000 in tax credit.
3. A special $300 charitable tax deduction
The IRS has always considered charitable contributions as itemized deductions. That is, if you contributed to some philanthropic activity and wish to report it on your tax return, you must do the same as an itemized deduction that takes away your privilege to claim the flat $12,550 standard deduction. However, for the tax year 2021, you can claim the standard deduction and add a special charitable tax deduction worth $300 as a single filer. Together with your married spouse, you can claim $600 as a charitable tax deduction – enough to pay a down at Family Auto of Taylors to purchase buy here pay here used cars in Greenville.
4. Receive pending stimulus money through a recovery rebate credit
As part of the American Rescue Plan, the Federal Government had announced that almost every individual in the country was eligible to receive $1,200 as stimulus money with an additional $500 for every child. And the last phase of payments was concluded in March 2021. If you are still to receive your pending stimulus money, you can claim the same through your IRS Form 1040 as a Recovery Rebate Credit. This, again, will help to increase your tax refund, enabling you to end up with more cash in hand than any other tax year before this.
And extra cash brings extra spending power, which you can use to pay a sizeable down payment at Family Auto. Buy a used car with a comprehensive 2 years/36,000 miles warranty without spending anything from your savings and take ownership of an asset with your tax refund money. The 2022 tax season is the best year to invest in a used car as the available IRS credits are abundant. Visit Family Auto today and purchase the right used car for you and your family.