This year saw a boost to the Child tax credit payments as a result of Joe biden‘s American rescue plan, but the changes only apply to 2021, after which the increase will end.
Still, Biden and Democrats in Congress are trying to keep the Child tax credit uprising in place, with the update of the US president Rebuild better plan including a provision for this purpose. If it passes, the Child tax credit boost will remain in place for an additional year – until the end of 2022 – although there are a few notable changes.
There is optimism on the part of Democrats that this expansion will bear fruit, so what will be the changes? We’ll walk you through the basics below.
The 2021 changes to the child tax credit
In order to better understand the differences between the 2022 Child tax credit and this year’s version, you first have to understand what changes have been made.
In 2020 the Child tax credit was worth $ 2,000 per child 16 and under, while in 2021 it rose to $ 3,000 for children aged six to 17, with $ 3,600 for those aged five and under.
More monthly payments to come
Regarding the differences between 2021 Child tax credit and the potential 2022 release, one of the first notable changes is an increase in monthly payments, if the beneficiary opts for this option. In 2021, six monthly installments were sent between July and December, the second half of the Child tax credit arriving in 2022, while for the 2022 proposal there would be 12 monthly payments – from January to December.
Fewer people eligible for monthly payments
Anyone qualified for 2021 Child tax credit was able to receive the payments on a monthly basis, but in 2022 it will depend on whether your modified adjusted gross income (AGI) is too high, the threshold being $ 75,000 for single filers, $ 112,500 for family filers, and $ 150,000 for joint filers.
No social security number required
The Child tax credit was not allowed for a child who has no Social Security number, and it is necessary to include the Social Security number on your tax return. This entered into force from 2018 and is not expected to expire before 2026.
Biden, however, calls for the Social Security the numbering requirement is to be removed from 2022, which would make it easier for non-citizens to claim the Child tax credit.
The Child tax credit was only partially reimbursable before 2021, up to $ 1,400 per eligible child, and you needed at least $ 2,500 of earned income to qualify. In 2021, the credit became fully refundable and working income requirements were suspended.
However, in 2022, the partial refund and earned income rules are expected to return. Biden’s proposal would make 2022 Child tax credit fully refundable on a permanent basis, but the condition is that you must have lived in the United States for more than half of the year or be a resident of Puerto Rico.