When you are a taxpayer who receives a refund on filing income taxes, you may have noticed that the refunds are reducing slowly this year. What is the reason behind this? You may ask. Well, the enhancement of income tax credit that happened to help taxpayers in the tough times of COVID-19 is fading away.
Stimulus Check Payments:
Many of the American taxpayers have got the stimulus check payments of six hundred and twelve hundred dollars in 2020. It was a segment of the relief effort of pandemic. Another check of fourteen hundred dollars came following the previous stimulus check payments in 2021.
A lot of the American taxpayers got these payments in advance. They arrived like stimulus check payments through bank or card transfers. However, people who did not receive these payments got the money when they filed their tax returns in 2020 and in 2021.
However, there has been zero stimulus check payments from the federal government despite some states providing such stimulus check payments.
Enhanced Income Tax Credit:
For those with low to moderate incomes, there is a tax cut known as the EITC. The EITC did receive a lift from inflation, but that pandemic-level benefit has now disappeared. Depending on the number of dependants claimed as well as the filing status (single or joint), the EITC ranges from 16.5K USD to 59k USD for tax year 2022.
Child Tax Credit:
A lot of the American taxpayers received two grand in stimulus check tax credits for their dependents under seventeen years old. Under the Rescue Plan Act of the country, this amount had risen to three thousand dollars for each child under six years of age and 3.6k USD for child under the age of six to eighteen.
