The Child Tax Credit was born from the Economic Rescue Plan to support working families. This benefit was announced only for 2021, so the question arose as to whether we are getting Child Tax Credit in 2022.
After the expected speech of President Joe Biden, the continuity of the Child Tax Credit has been announced for this year and maybe in the coming years. It was clear that it has been an effective measure that the Democratic Party intends to maintain.
It is the largest credit in history. Some requirements must be met for this year to receive up to $2,000 with no monthly payments. The figure increases for families eligible for the expanded credit.
Who continues to receive the Child Tax Credit?
Last year many families signed up for the Child Tax Credit but received half of the benefit. This 2022 the money will be distributed in a one-time year-end tax credit; this will reduce the tax bill amount or increase the tax refund.
We will have Child Tax Credit in 2022 to help working families with income covered by the program. Eligible families are those who meet the requirements. They can apply for extended credit and receive more money when they file their taxes.
You are eligible for the Child Tax Credit if:
- You are single, and your income is less than $75,000.
- If you are single and file your taxes as head of household, your income must be less than $112,500.
- You are married, and your combined income does not exceed $150,000.
- Your child has a Social Security Number; you can file with an ITIN.
- The dependent child who lived with you for more than six months in the past year is also a relative or eligible foster child.
- If income exceeds the above amounts, you will receive lower payments based on your income.
If you want to be eligible for the extended Child Tax Credit, keep the following in mind:
- File taxes, even if you don’t usually do so. This will show the IRS where to send payments and how many children you are responsible for.
- If you don’t file taxes, you could miss out on other tax credits.
The expanded Child Tax Credit was worth $3,000 for children ages 6 to 17 and $3,600 for children under 6 in 2021. Families only received half, so they are waiting to receive the other half this year.
The most important requirement is the tax return. Although the deadline was April 18, families can still file a tax return and apply for eligibility.
Changes to the Child Tax Credit 2022
This year, the Child Tax Credit has returned to the $2,000 amount and is presented as a lump sum payment. Instead, for 2021 the income of the first half of the credit was distributed in the form of monthly direct payments; this temporary modification lowered the level of child poverty.
The monthly direct deposits were $300 for children under age 5 and $250 for children over age 6 through age 17. In 2021 all limits underwent favourable increases, which remains under discussion among Washington lawmakers.
The intention is to maintain the amounts handled last year and extend the benefit for a longer period, that is, to make the change in the Child Tax Credit in the long term. The argument of treating it as pandemic relief no longer exists.
So far, it returns the amount to $2,000 also; the age limit returns to normal, i.e., 16 years. Eligible 2021 families will receive the second part of the tax credit this 2022 as long as they file a tax return.
Child Tax Credit is partially refundable
Another point to affirm that we will have the Child Tax Credit in 2022 is that it is agreed to be partially refundable. The $2,000 per child is only available to families that contribute at least that amount in income tax.
The proposal to make the tax credit fully refundable was heard. This would be a great achievement for families with low or no income, as they would be eligible for the benefit.
According to some experts, full reimbursability through Build Back Better and higher per-child lump sums would help reduce child poverty by more than 40%. The Center on Budget and Policy Priorities estimates that full reimbursement would account for 87%.
It is worth remembering that in 2021 low-income families were eligible, including those who did not earn enough money to file taxes.
The Child Tax Credit was fully refundable last year. It was applied against taxes owed to the Federal Government. This decision helped offset any family or head of household tax liability.
If there was no tax liability, the money was paid as a refund. Fully refundable was to receive the full amount of the credit as a refund. This year, the monthly checks ceased until the tax return was filed and the announced changes could be applied.
For years I have studied American finance regulations. All the information in this blog is sourced from official or contrasted sources from reliable sites.
Salesforce Certified SALES & SERVICE Cloud Consultant in February 2020, Salesforce Certified Administrator (ADM-201), and Master degree in “Business Analytics & Big Data Strategy” with more than 13 years of experience in IT consulting.