Tax Season coming with changes, how the child credit and earned income credit could affect returns

DELMARVA – The 2023 tax season could see one of the largest changes to the child tax credit in recent years, with the Senate now considering whether to pass an expansion that would take effect during this tax season.

Increasing the current 1,600 credit per child and how much of that sum is refundable, the credit would go up by 100 dollars per year for the next 3 years.

“A married couple who qualify as they make under 4000. They have three children. If this passes, they’re going to get 200 extra, potentially 200 extra dollars per child, as far as a refund. so that would be 600 extra dollars as part of a refund for that family,” said CPA Mark Welsh of the UHY group of Salisbury.

But it’s not just what’s new this tax season that experts say people must be aware of, it’s also what’s already here but not being used.

According to The IRS, one-fifth of Americans who qualify for the earned income tax credit don’t apply, leaving up to 7,000 dollars unclaimed, but tax preparers say those dollars aren’t always easy to access.

“You’re asking them to jump through some hoops as they relate to qualifying child guidelines, relationship test age, test residency, residency test, some of them, they just scared off and they don’t want to do it,” Welsh said.

But luckily organizations like ShoreUp offer free tax prep for families earning less than $65,000.

In just the last year ShoreUp has secured their clients 600,000 dollars in returns from that credit alone calling it a lifeline for low-income earners including seniors.

“That’s happening more and more, particularly with the elderly. We find that there are a lot of individuals who are trying to get by on very limited incomes, they can’t make ends meet, and they don’t know what to do,” said ShoreUp Director Julie Peters.

Peters tells us they recently had a 75-year-old widow come to them with help after the death of their husband, and is unable to maintain her home with her fixed social security income, but will benefit thanks to this program, adding that many that qualify are picking which bills to pay and which to let bounce.

Shoreup says they’re ready to help as many folks as possible claim the money they’re owed this tax season.

“Last year we prepared tax returns for 1762 households in Delmarva, and of those roughly 25 to 30%, I received the earned income tax credit,” Peters said.

But there is still a wrinkle in getting the returns out on time for this year.

Mark Welsh of UHY says they haven’t sent a single return in yet as they are waiting to see if the child credit moves forward.

Welsh says that delay could lead to a crunch of filing once that bill’s future is solidified