by: Sarah Hudacek, AOF Policy Assistant
This tax season, it’s more important than ever that every Ohioan file an income tax return - yes, every Ohioan, regardless of income level! Because of flexibilities included in the American Rescue Plan Act (ARPA), many Ohioans and their families will be eligible to receive thousands of dollars back in their federal tax return through the Child Tax Credit, the Earned Income Tax Credit, the Child and Dependent Care Tax Credit, and any missed third stimulus checks.
Why should every Ohioan file taxes, though? You might be eligible for credits you were never eligible for before, even if you don’t make enough to be required to file taxes. The state and federal tax filing deadline is April 18th, 2022. Here’s what you need to know:
Child Tax Credit
Most families with children under 18 are eligible to receive the expanded Child Tax Credit (CTC), which delivered monthly payments to many families from July 2021 to December 2021. Those payments were just the first half - families will receive the second half of the $3,600 credit when they file their taxes. If you didn’t automatically receive monthly payments, you could still be eligible to receive the full credit in a lump sum when you file. This major expansion of the CTC has not yet been approved by Congress for future years, meaning this is a unique opportunity to receive significant support for families with children.
Earned Income Tax Credit
Also this year, more people are eligible to receive greater returns from the Earned Income Tax Credit (EITC). The EITC is available to workers, whether or not they are married or have children. The most notable change to the EITC from ARPA was an expansion of the EITC for workers without dependents. Additionally, Ohio offers its own state EITC that can be combined with the federal EITC when eligible workers file taxes.
The main difference between the state and federal EITCs, aside from Ohio’s being smaller than the federal credit, is that the federal credit is refundable, while Ohio’s is not. Ohio’s EITC can only be applied to outstanding taxes due to the state at the time of filing, even if the amount that you owe to the state is less than the total amount of the credit. Any leftover state EITC balance cannot be used. With the federal EITC, any credit balance that is not applied to outstanding taxes due to the IRS is received as a tax refund.
Child and Dependent Care Tax Credit
The Child and Dependent Care Tax Credit (CDCTC) is another credit that can help offset child care or dependent care expenses for working families. This tax season, the CDCTC is refundable for the first time. Tax filers can claim more than 2.5 times the cost of dependent care expenses than was previously allowed, and the percentage of dependent care expenses families can receive as a refund is greater.
Stimulus Checks
The third COVID-19 stimulus payment was also issued in March 2021. If you either didn’t receive the third stimulus check, or had a baby in 2021, you might be eligible to receive this $1,400 per person payment when you file taxes.
Don’t Wait to File!
If you make less than $12,550 per year, or $25,100 when filing jointly, you’re eligible for simplified filing, which begins in May 2022. When using simplified filing, filers won’t have to verify their income or provide tax documents, among other differences that make simplified filing a much quicker process. While a great option for many low-income Ohioans, filers who utilize simplified filing are not able to claim the EITC, meaning thousands of dollars of credits could be lost if EITC-eligible Ohioans don’t file by April 18th. If you’re considering taking advantage of simplified filing, be sure it’s the right choice for you.
Filing taxes is a confusing process for almost every household, but this year’s expanded credits mean Ohioans and their families can receive a vital boost to help as they recover from the pandemic. Don’t leave money on the table this tax season! For free virtual tax help, visit GetYourRefund.org/CTCOH.
For more information, check out these resources:
Children’s Defense Fund-Ohio and Policy Matters Ohio: Get that money now: Expanded tax credits can help families meet their basic needs and thrive
Children’s Defense Fund-Ohio and Policy Matters Ohio: Webinar: Get That Money! Ensuring Ohio families know about and can access their tax credits
Children’s Defense Fund-Ohio: Families Deserve a Robust, Permanent Simplified Tax Filing Option