The U.S. tax season officially started on January 24, 2022, and since then, the IRS has been hard at work processing tax returns and sending out tax refunds. For those that filed early, their refund checks may already be in the mail or deposited electronically directly to their bank accounts. But if you’re like many other taxpayers across the country, odds are you’re still organizing your paperwork and trying to get a handle on 2022 tax refund changes.
Since you filed last year, there have been a number of updates that may affect your tax refund. Changes to this year’s filing would include the advance child credit payments, third economic impact payments and other 2021 tax updates that can positively or negatively affect the refunds of millions of Americans. How will these play out with your taxes? Will your 2022 tax refund be lower?
Luckily, we’ve put together some of the major changes you’ll need to be aware of — as well as other useful tidbits of information — for the 2022 tax season. So don’t delay any further and learn how you can avoid potential processing hiccups and speed up the receipt of your refund.
5 Big 2022 Tax Refund Changes
Whether it’s due to the lingering effects of the COVID-19 pandemic or even steps taken by the government to ensure that the nation’s economy would remain strong, the 2022 tax season has provided many Americans with the opportunity to receive potentially larger refund checks.
Here are five specific examples that have benefited Americans this tax season.
1. Advance Child Tax Credit Payment
The first big 2021 tax change probably has the most impact on American families. Unlike previous years, many families in 2021 received monthly payments as an advance against the child tax credit. The monthly amount sent to families was $250 for children ages 6-17 and $300 for children under 6.
In total, the credit provided $3,600 for children under 6 and up to $3,000 for children 6-17. This amount had been increased from the $2,000 given in prior years. It also added an additional $600 for children under 6. Under the Advance Child Tax Credit, families received 50 percent of this tax credit as advance payments every month from July to December.
With $1,500 received as an advance, the remaining $1,500 (or $1,800 depending on the child’s age) will be applied to the 2021 tax filing. Keep in mind that though you are adding the $1,500 (or $1,800) to your filing, this is less than the $2,000 applied in previous years. But don’t forget, you already banked the other half of the money in the 6 months’ worth of installment payments.
The Advance Child Tax Credit benefited many families in 2021. Unfortunately for 2022, however, there is no plan to continue these advances payments...or at least not yet.
2. Stimulus Payments and Recovery Rebate Tax Credit
If you did not receive the total amount for the full third stimulus check, you may be eligible to receive the credit. Those who did not receive the full amount of the third stimulus check will be sent a Letter 6475 with information regarding the recovery rebate tax credit.
Also, if your payment was never received — possibly lost or even stolen — you are still entitled to the money but will need to contact the IRS and request a payment trace. This will allow the IRS to determine if the check was cashed and who signed the check. You'll get a replacement check giving you the money that you are due.
3. Charitable Tax Deduction
In your 2020 tax filing, you were allowed to deduct $300 in charitable donations as cash contributions. For your 2021, the charitable giving deduction has been increased to $300 per person. So if you are married and filing jointly, you can claim a $600 deduction, essentially doubling the allowance from last year. Another piece of good news is that you will not need to itemize your deductions.
4. Medical Expense Deductions
Insurance payments, doctor’s visits, copays, medicine and deductibles are costly and make a big dent in the average American families’ budget. Luckily, some of these medical expenses are tax-deductible. For 2021, the IRS has lowered the cap for medical expenses from 10 percent of your annual gross adjusted income to 7 percent. In other words, if you earned $60,000 in 2021 and spent over $4,500 in medical expenses, you can claim that amount as a deduction in your taxes.
5. Unemployment Compensation
Unlike 2020 when you were able to avoid paying taxes on your unemployment benefits — up to $10,200 — this break does not apply for 2021, leaving those looking for a job on the hook to pay taxes on their unemployment.
Will Tax Brackets Change in 2022?
For the 2021 tax year, tax brackets have increased slightly, as they do most years. Since last year, brackets have adjusted upwards by just 1 percent.
Here are the tax brackets for tax year 2021:
|
Tax Rate |
Single |
Married Filing Jointly |
|
10% |
Up to $9,950 |
Up to $19,900 |
|
12% |
$9,951-$40,525 |
$19,901-$81,050 |
|
22% |
$40,526-$86,375 |
$81,051-$172,750 |
|
24% |
$86,376-$164,925 |
$172,751-$329,850 |
|
32% |
$164,926-$209,425 |
$329-851-$418-850 |
|
35% |
$209,426-$523,600 |
$418,851-$628,300 |
|
37% |
$523,601 and up |
$628,301 and up |
Using the taxing brackets, here is the breakdown on $100,000 by a single tax filer:
- $9,950 will be taxed at 10 percent
- $30,574 will be taxed at 12 percent
- $45,849 will be taxed at 22 percent
- $13,624 will be taxed at 24 percent
But here's a little heads up! Doing the math and coming up with an estimate on how much you pay in taxes may be even more confusing, especially considering the tax credits and deductions that will apply to your taxes. And since everyone's final tax bill will vary, the percentage rate will vary as well.
How to Speed up Receipt of Your Tax Refund
The best way to get your refund in your hands is to file early and file electronically. Whether you file on your own, have a professional service, or leave it to a trusted friend or relative, having an online IRS account will help speed up the filing process and make monitoring your taxes much easier than following the paper-and-pencil to mailbox method.
For starters, when it comes to setting up an online IRS account, you will need the following:
- An email address
- Mailing address
- Valid ID, including a driver’s license or passport
- Your Social Security number (SSN) or Tax Identification Number (TIN)
Once you’ve got all this information together, go to IRS.gov and complete the following steps
- Go to “Sign In or Create a New Account”
- Select the “Log in to your Online Account” button
- Click “Create Account”
- Pass “Secure Access” authentication. (Individuals must be able to authenticate their identity to continue to set up an account)
- Create a profile
Don’t Leave Money on the Table When Filing Your Taxes in 2022!
You have until Monday, April 18 to file your taxes. If you need more time, you’ll need to file for an extension. Hopefully, you are getting ready to submit your 2021 taxes. If that’s the case, the fastest way to receive your refund payment is by filing electronically.
Like most tax filers, you want to make sure you get the biggest tax refund. To achieve this, you'll need the assistance of a professional.
If you need support in filing your personal or business taxes, your next step is to get the right help. Incfile's Accounting and Bookkeeping service can provide you with tax help and also keep your books in order all year long so that tax time is less of a burden.
Peter Mavrikis
Peter Mavrikis is an author and editor with over 25 years of experience in publishing. He has worked as the Editorial Director for Barron’s Educational Series, as well as Kaplan Test Prep, where he ran the test prep, foreign language, and study guide divisions. Peter has also written several books on history, exploration, science, and technology.
