As the year comes to an end, many families are wondering what will happen with the Child Tax Credit (CTC). The CTC has been a valuable tax credit for American families for many years, providing financial assistance to help raise children. In 2021, the CTC was expanded to provide more help to low and middle-income families. However, with the new year approaching, families are questioning whether they will continue to receive the rest of the CTC. In this post, we will discuss the current state of the CTC and what we can expect in the coming year.
The Current State of the Child Tax Credit
The CTC was expanded for 2021 as part of COVID relief legislation. Under the new rules, families could receive up to $3,600 per child under six years old and up to $3,000 per child ages six to 17. The credit was also made more accessible to lower-income families, with many families receiving monthly payments starting in July 2021. These payments will continue until December 2021, at which point, taxpayers will need to claim the remainder of the credit on their 2021 tax returns.
However, it is important to note that the expanded CTC is only in effect for the 2021 tax year. There is currently no legislation to extend the CTC for 2022 and beyond.
New Child Tax Credit Rules for 2022
While the 2021 expansion of the CTC was only for one year, there are new rules that will apply to the credit starting in 2022. These rules include:
- The maximum credit amount will revert back to $2,000 per child
- The age limit for the credit will remain at 17 and under
- There will be a new phaseout limit of $200,000 for single filers and $400,000 for joint filers
These new rules mean that families will no longer be able to receive the higher credit amount and will be subject to a new income limit for claiming the credit.
What to Expect in 2022
As we approach the new year, it is unclear whether there will be any further changes to the CTC. The Biden administration has proposed extending the CTC for an additional four years, but this proposal has not yet been approved by Congress.
If the CTC is not extended, families will revert to the pre-2021 rules, which means lower credit amounts and income limits. However, it is important to note that the CTC is just one of many tax benefits available to families with children. It is always a good idea to review your current tax situation and see if you are eligible for any other tax credits or deductions.
Conclusion
The CTC has been a valuable tax credit for families for many years, and the 2021 expansion provided much-needed relief to many families. While the expanded credit will not continue into 2022, there are still tax benefits available for families with children. As we approach the new year, it is important to review your current tax situation and see if you are eligible for any tax benefits. If you have any questions or concerns about the CTC or your taxes in general, it is always a good idea to speak with a qualified tax professional.
FAQ
How long will the Child Tax Credit last for?
The Child Tax Credit (CTC) was established as part of the Taxpayer Relief Act of 1997. The CTC is a tax credit that parents or guardians can claim on their tax return for each qualifying child under the age of 17. The credit is designed to help families offset the cost of raising children.
In March 2021, the American Rescue Plan Act (ARPA) was signed into law, which included significant changes to the Child Tax Credit for the tax years 2021 and 2022. Under the ARPA, the CTC increased from $2,000 to $3,000 per child aged 6 to 17 and $3,600 per child under the age of 6.
Additionally, the ARPA made the credit fully refundable and removed the minimum income threshold for receiving the credit. And for the first time in U.S. history, many taxpayers also received half of the credit as advance monthly payments from July through December 2021.
However, it’s important to note that these enhancements to the CTC are only temporary. The changes made by the ARPA are set to expire at the end of 2022. Starting in 2023, the CTC will revert back to the rules established by the Tax Cuts and Jobs Act (TCJA) of 2017, including the $2,000 cap for each qualifying child.
The Child Tax Credit has been enhanced for the tax years 2021 and 2022 under the American Rescue Plan Act. However, these enhancements are only temporary and will expire at the end of 2022. Starting in 2023, the credit will revert back to the previous rules established by the Tax Cuts and Jobs Act.
What if I didn’t get my Child Tax Credit payment?
The Child Tax Credit is a program that provides financial assistance to parents and guardians who meet certain requirements. The credit is designed to assist with the cost of raising children and is paid out in the form of a tax credit. However, it is possible that you may not receive your Child Tax Credit payment for a variety of reasons.
One reason you may not receive your Child Tax Credit payment is if the IRS does not have your current information. The IRS may have outdated information if you have moved or changed your contact information. It is important to make sure your information is up-to-date to ensure that you receive your payments.
Another reason you may not receive your Child Tax Credit payment is if you did not file a tax return for 2020 or 2019. The IRS uses the information from your tax return to determine your eligibility for the credit and your payment amount. If you did not file a tax return, you may need to submit one to be eligible for the Child Tax Credit.
If you are eligible for the Child Tax Credit but did not receive your payment, there are steps you can take to ensure that you receive the credit. You can check the status of your payment on the IRS website or contact the IRS directly to inquire about the status of your payment.
If you did not receive your payment, you can claim the full amount of the 2021 Child Tax Credit on your 2021 tax return. This means that even if you did not receive the advance payment, you can still receive the full amount of the credit when you file your taxes.
If you did not receive your Child Tax Credit payment, it is important to check your information and contact the IRS for assistance. If you are eligible for the credit, you can still claim it on your tax return if you did not receive a payment.
