Congratulations! You have made it through 2020 and 2021 and now you have arrived in style in 2022. The IRS sent out a friendly notice for individual taxpayers recently reminding everyone that if you made money in 2021 (and possibly in earlier years) you owe them money. Surprise! Or not. Either way the tax man cometh and there are a few items to remember this filing season.
- Just because you got a child (or dependent) tax credit doesn't mean you get to keep it.
- If you didn't get a child (or dependent) tax credit but think that you are entitled to one you may need to file to get it.
- If you haven't filed taxes in the past because you didn't make enough money you should really consider filing.
The IRS issued prepayments for tax credits based on your 2019 and 2020 income. For most people this works perfectly as income either held relatively steady or went down in 2021. However, some people got that big promotion or a raise they were looking for in 2021. If that's you, first, Congratulations!, second, get out your checkbook you may need to pay back the child tax credit. The IRS has a great FAQ page regarding the phaseout but generally for married couples the first phase of the phaseout begins at around $150,000 AGI. The second phase of the phaseout doesn't generally kick in for married couples filing joint until $400,000 AGI so there is good news there.
If the IRS didn't send you child tax credit payments that you were due don't worry. You can still claim the child tax credit payment at tax time. You can check your eligibility using the IRS eligibility assistant or discuss it with your tax return preparer.
If you have not filed taxes in the last few years because you don't make enough you really need to consider filing. This is especially true if you have children or other dependents. Additionally, even if you are single the Earned Income Tax Credit may result in your receiving a refund even when you haven't paid any taxes.