What you should know
· Increased amount: The American Rescue Plan significantly increased the amount of Child Tax Credit a family could receive for 2021, typically from $2,000 to $3,000 or $3,600 per qualifying child. It also made the parents or guardians of 17-year-old children newly eligible for up to the full $3,000.
- Income eligibility: All eligible families can receive the full credit if they made up to $150,000 for a married couple or $112,500 for a family with a single parent in 2021.
- Advance monthly payments: The American Rescue Plan—for the first time ever—provided tens of millions of families with advance monthly payments between July and December of 2021 worth up to one-half of their estimated full annual credit amount.
- Your remaining credit: Families, including those who received part of their Child Tax Credit as monthly payments last year, can get their remaining Child Tax Credit by filing a tax return this year.
- Non-taxable: The Child Tax Credit, including the monthly payments received last year, are not taxable.
- Does not affect other benefits: Receiving the Child Tax Credit will have no impact on anyone’s eligibility for, or lower the amount, of other federal benefits.
- File your taxes to receive your full credit: If you qualified for monthly Child Tax Credit payments but did not receive them, you will receive the full credit amount when you file your tax returns.
- For parents and legal guardians: Anyone, including grandparents, who are legal guardians may be eligible for the Child Tax Credit.
The child tax credit was expanded as part of President Joe Biden’s $1.9 trillion coronavirus relief package, which included a monthly payment of as much as $300 per child. Since the payments were first disbursed in July, Treasury and the IRS have issued roughly $93 billion to tens of millions of families, according to Treasury. And in December, 61 million children received the enhanced benefits.
Families received half of their expanded 2021 credit on a monthly basis and the other half will be received once they file their taxes. The enhanced portion of the child tax credit program has since lapsed. For tax year 2022, the child tax payment reverts to $2,000 annually per qualifying child, which in 2022 expands age eligibility to 17 year-olds.
The Biden administration has proposed extending the enhanced child tax credit for an additional year in its roughly $2 trillion social spending plan, but that bill is stalled in Congress.
“As tax filing season begins, Treasury’s priority is ensuring that eligible families are able to receive the full Child Tax Credit,” Deputy Secretary of the Treasury Wally Adeyemo said in a written statement.
“This relief has helped families pay for essentials when they needed it most and by getting the second half, or the full amount, of the credit millions of children can continue to benefit,” he said.
On a Monday call with reporters and tax professionals, IRS Commissioner Chuck Rettig reiterated the importance of taxpayers filing accurate tax forms electronically and the efficiency of requesting direct deposit refunds.