Tax filing season is fast approaching, and millions of Americans are working to get all the necessary paperwork ready on time. Every year, around this time, people begin to wonder how much their tax return can bring them. The edition told in more detail The Sun.
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Since 2020, Americans have been receiving higher-than-usual returns through various payouts and increased tax credits due to the pandemic.
This year, tax receipts will be slightly less, but there are still ways to maximize the amount you receive while lowering your tax bill.
1. Earned Income Tax Credit
Low to middle income households and individuals should look into the Earned Income Tax Credit (EITC).
Eligible individuals may receive $600 this year.
Families with children are entitled to:
- 1 child, $3
- 2 children, $6
- 3 or more children - $7
This loan has actually increased significantly compared to last year, when the maximum amount was only $6.
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EITC can be used to offset any taxes.
2. Tax credit for children
Along with the EITC, the Child Tax Credit (CTC) is one of the most popular loans.
Because extended CTC has not been federally renewed, the amount will revert to $2000 per eligible child.
Eligible parents must have income of $200 or less to apply for payments.
This amount is for individual filers, heads of households, and those who are married but file separately.
For couples applying jointly, this amount rises to $400.
For those with incomes above the limit, credit will be reduced by $50 for each additional $1000 of income.
Several states offer their own CTCs, so you may qualify for more money depending on where you live.
3. Solar tax credit
Homeowners and renters can charge up to $8000 to purchase energy efficient appliances.
These new tax credits come from the Inflation Reduction Act (IRA), which went into effect in August.
In 2022, households may receive a tax credit to cover 30 percent of the cost of installing rooftop solar panels.
4. Tax credit for electric vehicles
Along with loans for solar panels, there is also a loan for those who have bought electric vehicles.
New vehicles can lead to $7500 in credits if you earn less than $150 for an individual taxpayer or $000 if you file jointly.
The car must cost less than $55 or $000 if it's a van or pickup truck.
Big Tax Changes
Some changes are made every year during the tax season.
One thing that has changed this year is income tax levels.
Levels have been raised for the 2022 tax season to account for inflation.
Individual taxpayers:
- 10% - on income from $0 to $10 ($275 in 9)
- 12% - with income from $10 to $276 (from $41 to $775 in 9)
- 22% - with income from $41 to $776 (from $89 to $075 in 40)
- 24% - with income from $89 to $076 (from $170 to $050 in 86)
- 32% - with income from $170 to $051 (from $215 to $950 in 164)
- 35% - with income from $215 to $951 (from $539 to $900 in 209)
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When served together:
- 10% - on income from $0 to $20 ($550 in 19)
- 12% - with income from $20 to $551 (from $83 to $550 in 19)
- 22% - with income from $83 to $551 (from $178 to $150 in 81)
- 24% - with income from $178 to $151 (from $340 to $100 in 172)
- 32% - with income from $340 to $101 (from $431 to $900 in 329)
- 35% - with income from $431 to $901 (from $647 to $850 in 418)
Increased pension contribution limits for 401K
The individual contribution limit for 401Ks has increased to $20 in 500 — $2022 more than in 1000.
Workers over 50 are eligible for an additional $6500 contribution.
The total contribution limit, which includes contributions from your employer, is $61 for 000 ($2022 for those aged 67 and over).
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