Tax season is here and many Americans are already preparing to file their taxes. However, the IRS is warning taxpayers to hold off submitting their 2022 returns until they can include all the new benefit information related to the American Rescue Plan.
The Latest COVID Relief Package
The American Rescue Plan was passed in March and provides additional benefits to taxpayers. It includes an additional $1,400 stimulus check, an increase in the child tax credit, and increased unemployment benefits. The new law also includes some new tax credits, such as the new Earned Income Tax Credit (EITC) and the Child and Dependent Care Tax Credit.
Confusion Over State Benefits
The biggest source of confusion, however, is the state benefits. The new law provides additional aid to state and local governments, but the details of exactly how those benefits will be distributed is still up in the air. This makes it difficult for taxpayers to accurately calculate their taxes and determine whether they qualify for any of the new credits.
IRS Advice
The IRS is advising taxpayers to wait until all the details are finalized and the agency can provide more guidance. Until then, taxpayers should not submit their returns, as they may not be able to take advantage of all the new benefits or may end up owing more money than they expected.
What to Do Now
In the meantime, taxpayers should start gathering all the necessary documents, such as W-2s and 1099s, so they are ready to file when the time comes. They should also take the time to familiarize themselves with the new tax credits and other changes so they can make the most of their returns.
Conclusion
Tax season is already a stressful time for many, but this year is even more complicated due to the new American Rescue Plan. The IRS is advising taxpayers to wait until all the details are finalized before submitting their returns so they can take advantage of all the new benefits. In the meantime, taxpayers should start gathering documents and familiarizing themselves with the changes.
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