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Do you qualify for this type of stimulus relief?
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For the first time since 2019, there were no new stimulus payments sent out by the federal government last year.
Despite strong demand for another direct payment and despite surging inflation, lawmakers in Washington, D.C. have not passed a stimulus bill since the American Rescue Plan Act was signed into law shortly after President Joe Biden took office in 2021.
The IRS recently issued a news alert warning taxpayers their tax refunds may be lower due to the absence of new stimulus aid last year. But, in the same release, the taxing authority did point out that one type of COVID-19 aid authorized by the stimulus bill is still available to claim this tax-filing season. Here’s what it is.
This tax credit is available during the 2023 filing year
The stimulus relief authorized by the American Rescue Plan Act that the IRS explained is still available in 2022 relates to a specific kind of tax credit that was expanded by the COVID-19 legislation.
“Taxpayers may still qualify for temporarily expanded eligibility of the Premium Tax Credit, a refundable credit that helps eligible individuals and families cover the premiums for their health insurance purchased through the Health Insurance Marketplace,” the IRS news release read. “To get this credit, taxpayers must meet certain requirements and file a tax return with Form 8962, Premium Tax Credit.”
The Premium Tax Credit was first authorized by the Affordable Care Act, but during the 2021 and 2022 tax years, eligibility was expanded. This expansion came in the form of an elimination of a rule that prevented taxpayers from qualifying for the Premium Tax Credit if their incomes exceeded 400% of the national poverty line.
Since more people were made eligible for the credit by the COVID relief bill, the IRS wants to ensure that those who benefit from the rules change will get this extra money when they file their 2022 taxes if they did not already get the additional help covering insurance premiums throughout the year.
Other stimulus-related tax credits are expiring
It’s good news that this stimulus relief is still available, but several other key changes made by the American Rescue Plan Act are not as favorable.
In addition to the fact there was no direct payment authorized into people’s bank accounts in 2022, the expansions of both the Earned Income Tax Credit and the Child Tax Credit have expired. The IRS warned these factors would result in “a significantly smaller refund compared with the previous tax year,” for many tax filers.
It’s important to be aware that fewer credits may be coming to you, while also ensuring that you claim your Premium Tax Credit if you qualify under the expanded eligibility rules the American Rescue Plan Act created. If you aren’t sure how to handle these tax changes, working with a professional might help as you submit your tax returns this year.
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