What You Need To Know About the Child Tax Credit Program
Raising a child is an expensive endeavor. To assist with the financial responsibility, the government created the Child Tax Credit program for mid- to low-income families. Amid the economic turmoil caused by the pandemic, President Biden signed the American Rescue Plan Act of 2021, which contained legislation to temporarily expand the program eligibility and benefits for that year. Read our guide to learn more about the program and the important updates for 2022.
What Is the Child Tax Credit Program?
The Child Tax Credit is a tax credit program intended to help qualifying low- to mid-income families with the cost of raising a child or children. In 2021, the program was temporarily expanded under the American Rescue Plan, resulting in a fully refundable tax credit, a larger financial benefit, increased age eligibility as well as direct payments to families for half the year. However, those changes only applied in 2021, and legislation to continue the Child Tax Credit expansion has stalled. For families who received direct payments in 2021, the remaining tax credit can be claimed with the appropriate filer’s tax return. Qualifying taxpayers who did not receive direct payments can claim the full tax credit on their 2021 tax returns. If you need to check your eligibility or view your payment total to file taxes, use the Child Tax Credit Update Portal.
What Are the Updates for the Child Tax Credit in 2022?
The Child Tax Credit program changes that were made for 2021 are set to revert in 2022 unless further legislation passes. The program changes will include a smaller, nonrefundable tax credit of $2,000 for each qualifying dependent ages 17 and younger to be claimed with the appropriate year’s tax filing. As of right now, the IRS has not released income restrictions to qualify for the tax credit. However, program qualifications and guidelines may change before tax filing season, so it’s important to follow the latest regulations for the Child Tax Credit program.
What Are Alternatives to the Child Tax Credit?
Although the Child Tax Credit program has not ended, its benefits and eligibility qualifications have changed after 2021. Because there are no direct monthly payments and the credit itself is smaller, families may need financial help to cover their costs. If you need financial assistance to pay for emergency bills or expenses, you may want to consider applying for a loan, reducing your expenses or using the free online platform SpringFour to locate resources and employment in your area.
The information in this article is provided for educational and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness or fitness for any particular purpose. The information in this article is not intended to be and does not constitute financial, legal or any other advice. The information in this article is general in nature and is not specific to you the user or anyone else.