2022 Changes to Dependent -related Credits

With back-to-school week in full swing, kids are forefront on minds. As parents, you’ll want to be prepared for the tax changes that affect your dependent-related credits in 2022.

The American Rescue Plan Act (ARPA) expanded the Child Tax Credit (CTC) program in response to pandemic challenges, but it’s important to note that this was a temporary change ONLY for tax year 2021. With the expansion now ended, the CTC program will revert back to 2020 rules. For current year 2022 tax purposes, credits will return to $2,000 per child, and 17-year-olds are again excluded. The Dependent Care Credit reverts back to a non-refundable credit of 20% to 35% of qualified expenses. The percentage depends on your adjusted gross income (AGI) and the maximum amount of qualified expenses allowed is reduced back to $3,000 for one qualifying person. Just a reminder, please keep good records of any child care expenses you pay for tax purposes!