TL;DR - Changes to the Child Tax Credit (CTC) could significantly alter the financial situation of families who had previously benefited from Advance Child Tax Credit Payments.
This post is intended to provide informational content regarding the Child Tax Credit and changes to the advance Child Tax Credit payment scheme. Please refer to federal, state and local government websites linked below for up-to-date information regarding the revised Child Tax Credit.
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- The Child Tax Credit for the 2022 tax season has been revised down to the pre-COVID $2,000 per eligible child.
- If you haven’t done your 2021 taxes yet, the credit is $3,000 (children under age 17) or $3,600 (children under age 6) per eligible child for American taxpayers.
- It is fully refundable, and 50% of it could be received as advance payments.
- Eligible children are legal dependents who are U.S. citizens, U.S. nationals, or U.S. resident aliens under the age of 17.
- The CTC can now be claimed by families with eligible children in Puerto Rico, the US Virgin Islands, and the other US Territories.
- Refundable - You get it all back in your refund check after you do your taxes.
What is the Child Tax Credit?
The Child Tax Credit is a tax benefit granted to American parents. Nearly all Americans with children qualify, but those families with higher incomes may not receive as much of a tax credit.
Is that the same as Advance Child Tax Credit payments?
Advance Child Tax Credit payments are early payments from the IRS. For those who already filed their 2021 taxes, these payments were 50% of the potential Child Tax Credit amount they received. The other 50% was awarded in the 2021 tax refund they got earlier this year.
How has the Child Tax Credit changed?
The Child Tax Credit increased for the 2021 tax season, and will be coming down for the 2022 tax season. The maximum annual credit was $2,000 per child under age 17 in 2020. Now, the maximum annual credit is $3,000 per child under age 17 and $3,600 per child under age 6. While the 2020 credit was partially refundable, the 2021 credit is fully refundable. For the 2022 tax season, the Child Tax Credit cap is $2,000, and it won’t include advance payments anymore.
How do I know if I qualify?
If you were eligible to receive CTC payments, you probably have already received them. Advance CTC payments began in July 2021 & should have continued until December 2021. This is true even if you had $0.00 in annual income. If you didn’t get those advance payments, and have eligible children in your household, you can claim the full credit if you’ve not filed your 2021 return yet.
The IRS paid half the total Child Tax Credit amount in advance monthly payments beginning July 15, 2021. Eligible families claimed the other half when they filed their 2021 income tax return, if they haven’t already. These changes apply to tax year 2021 only, as the legislation to extend the advance payment scheme has been voted down by the Senate while passing the Inflation Reduction Act.
Do I need to do anything?
Even if you don’t usually file taxes, you can use this online non-filer tool to get your CTC payments independent of a tax form/return. For that tool, you’ll need:
- Social Security numbers for your children
- Social Security numbers or ITIN for yourself & your spouse
- Current (trusted) mailing address
- This address doesn’t need to be a permanent residence. The US Dept. of Housing & Urban Development states that you can use the address of a friend, relative, or a shelter, day center, or transitional housing program.
- Your date of birth
- A current/active email address
- Bank account information, for receiving payments by direct deposit.
If your family qualifies for the credit and wants to receive advance payments as early as possible, confirm that the IRS has updated direct deposit information for your primary savings account. You can also include your Bridge account information on your 2021 tax return direct deposit if you’ve not filed your taxes yet, which gets your refund issued electronically.
You also may be able to use an online FAQ section created by the IRS to answer questions you might have about the CTC or child eligibility. The advance payment info portal is no longer available, but if you were awarded advance Child Tax Credit payments previously, you can see your payments in your account here.
- The IRS will never reach out to you first using digital forms of communication. If the IRS slides into your DMs, that’s a scam, don’t open anything they send you!
Just making sure…
If you got advance CTC payments this year, you might be nervous about reporting it.
Don’t be concerned, the CTC can’t affect other government benefits you might be receiving. SSI, SNAP, TANF, or WIC checks are not affected by getting a CTC or getting advance Child Tax Credit payments. Your placement in Public Housing, a Section 8 housing voucher, or any state/local benefit is also not at risk by claiming the CTC or if you had advance Child Tax Credit payments.
If you don’t have an account you can get direct deposit in, don’t worry! The advance Child Tax Credit payments went out by mail and electronically at around the same time, the 15th of the month.
- Advance Child Tax Credit payments are not taxable! They are not income.
- The only situation in which you’d need to repay is if the advance payments exceeded your “actual” benefit on your 2021 tax return.
- For example, if a family got payments for 1 qualifying kid who was on your 2020 tax return, but didn’t still have them in your household during 2021. The payments the “family” got based on that child, were estimated, so the difference is added to their income tax. (unless the family has qualified for repayment protection, which the IRS explains)
The Child Tax Credit is not going away. It is (unfortunately) being reduced to the pre-2021 benefit of $2,000 per eligible child. The advance payments are going away, but the tax credit will remain, and has been expanded to families in US Territories permanently, which grants access to an additional ~340,000 people. Families should plan around that $2,000 CTC per child, and not expect advance payments, just the benefit paid out in their tax refund. For now, the only way to get the CTC faster is to do your taxes as early in 2023 as possible.
While the passage of the Inflation Reduction Act has closed the door on the return of advance Child Tax Credit payments for the 2023 calendar year, American families will still receive a non-COVID-boosted Child Tax Credit in 2022. If you want to reach out to ask for advance payments or the expanded CTC benefit to be brought back, you can find contact info for your Representatives and Senators using this tool.