In 2022, the Child Tax Credit will likely be a lower benefit than last year.
This will be the case if the changes made to the credit aren’t extended.
What will the credit look like in 2022?
The federal Child Tax Credit was enacted in 1997 but has changed significantly over the years. The most drastic changes took place in 2021. The extended credit for 2021 has expired and there will be changes coming. Read more about it here.
During 2021, the tax credit reached $2,000 per child under 17. Democrats are hoping to get an extension of the changes through 2022 as well.
The Tax Cut and Jobs Act (TCJA) made $1,400 per child of the credit refundable. If the taxpayer owed less than the amount, it will be added to their tax refund as Additional Child Tax Credit (ACTC). However, there are eligibility limits.
You need to earn at least $2,500 to be eligible for the credit. Above that, taxpayers can claim 15% of their taxable income. The credit could then be subtracted from any taxes they owe.
Individual taxpayers with earnings above $200,000 and married couples filing jointly with adjusted gross income over $400,000 is where the credit phases out. There is a 5% decrease after that for every $1,000 over your earnings limit.
In order to claim the credit, you must fill out Schedule 8812 and file it with their tax return.