Tax Time Guide: American Rescue Plan changes can boost refunds for many families; people should file even if they haven’t for years

Tax Time Guide: American Rescue Plan changes can boost refunds for many families; people should file even if they haven’t for years

WASHINGTON – The Internal Revenue Service today urged Americans to file a 2021 federal income tax return so they can take advantage of key tax benefits included in the American Rescue Plan and other recent legislation.

Often, individuals and families can get these expanded tax benefits, even if they have little or no income from a job, business or other source. This means that many people who don’t normally need to file a return should consider doing so this year. Because claiming these benefits could result in tax refunds for many people, individuals should file an accurate return electronically and choose direct deposit to avoid processing delays and speed delivery of their refund.

Expanded tax benefits
A new fact sheet, FS-2022-10, available now on, describes many of these expanded tax benefits. But the IRS emphasized that these benefits are only available to people who file a 2021 federal income tax return. Benefits include:

  • An expanded Child Tax Credit: Families can claim this credit, even if they received monthly advance payments during the last half of 2021.
  • An increased Child and Dependent Care Credit: Families who pay for daycare so they can work or look for work can get a tax credit worth up to $4,000 for one qualifying person and $8,000 for two or more qualifying persons.
  • A more generous Earned Income Tax Credit: The American Rescue Plan boosted the EITC for childless workers. There are also changes that can help low- and moderate-income families with children.
  • The Recovery Rebate Credit: Those who missed out on last year’s third-round of Economic Impact Payments (EIP3), also known as stimulus payments, may be eligible to claim the RRC. This credit can also help eligible people whose EIP3 was less than the full amount, including those who welcomed a child in 2021.
  • A deduction for gifts to charity: The majority of taxpayers who take the standard deduction can deduct eligible cash contributions they made during 2021. Married couples filing jointly can deduct up to $600 in cash donations and individual taxpayers can deduct up to $300 in donations. In addition, itemizers who make large cash donations often qualify to deduct the full amount in 2021.

See the fact sheet for more information.

The IRS reminds early filers that by law, the agency cannot issue EITC refunds before mid-February. The same rule applies to refunds that include the Additional Child Tax Credit (ACTC). This year, the ACTC is typically claimed by Americans abroad who did not have a main home in the United States for more than half of 2021. Normally, the mid-February restriction does not apply to the Refundable Child Tax Credit (RCTC) claimed by people who had a main home in the U.S., unless they also claim the EITC.