With inflation making finances tough, monthly Child Tax Credit payments could really make an impact.
However, the credits have reverted to their pre-enhancement state.
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Has the Child Tax Credit changed?
Last year the Child Tax credit was expanded by the American Rescue Plan. This year, the credit is smaller and eligibility is more restricted. Under the Tax Cuts and Jobs Act (TCJA), the changes will remain in effect through the 2025 fiscal year, if Congress doesn’t make modifications before then.
One of the biggest changes in 2021 is that families could get the credit in monthly installments from July to December, rather than in one check at tax time. Going forward, the money will only be distributed as a single tax credit. It can be used to reduce the size of the recipient’s tax bill or increase their tax refund.
Taxpayers with eligible children will be able to claim a credit worth up to $2,000 per child. This year the credit is partially refundable and there is an earning threshold to claim $1,400– known as the Additional Child Tax Credit.
What children are considered eligible?
The 2022 Child Tax Credit is available for parents with dependents under the age of 17 at the end of 2022. For 2022-2025, the child must be claimed as a dependent to be eligible.
The child must also live at the same residence as the taxpayer for at least half of the year. The child also cannot provide more than half of their own financial support during the tax year.
The dependent must also have a valid taxpayer identification number in the form of a work-authorized Social Security number (SSN) to be considered eligible.
What are the taxpayer income requirements?
In order to be eligible for the Child Tax Credit, there is a parental income limit. Single filers must have an adjusted gross income (AGI) of less than $200,000, and no more than $400,000 for married filing jointly to claim the full credit.
If your earnings are above that, you may still be able to get a reduced credit. For every $1,000 you exceed the threshold, the credit will be reduced by $50. Lower income Americans, must have an income of at least $2,500 to be eligible for the refundable portion of the credit.
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