Does the Child Tax Credit Continue in 2022?
Parents of children age 17 and under got a $1,000 bump in their child tax credit for 2021, half of which was paid in monthly installments. The last of those monthly payments went out in December 2021. Does the child tax credit continue in 2022?
The way it looks right now, the increased child tax credits won’t be continuing into 2022. There's a plan to extend the credit, but politics is getting in the way.
Senator Joe Manchin is against extending the child tax credit increase.
President Joe Biden’s Build Back Better plan would extend the credit into 2022. Although most Democrats in Washington, D.C. support the bill, Senator Joe Manchin (D-W.Va.) is opposed to continuing the child tax credit in 2022. There's a slim chance that the bill will pass without Manchin’s support.
The 2021 increased child tax credit was part of Biden’s $1.9 trillion American Rescue Plan that went into law in March 2021. Under the new child tax credit provisions, eligible parents received $3,000 for children aged 6 to 17 and $3,600 for children aged 5 and younger. The credits were at least $1,000 more than the previous child tax credit, which was $2,000 for children age 17 and younger.
The bill also enabled half of the child tax credits to be paid early in the form of monthly checks of $250 or $300 sent to parents between July and December 2021. Parents get the remaining child tax credit on their 2021 tax returns.
To be eligible for the full child tax credit, single parents must have a modified adjusted gross income under $75,000 per year, and couples filing jointly must make under $150,000.
The child tax credit gradually declines by $50 for every $1,000 over those income thresholds. For example, if you're a single filer with an AGI of $80,000 and a child under age 5, your child tax credit would be $3,350. The maximum AGI a parent can have to receive the tax credit is $240,000 for a single tax filer and $440,000 for a couple filing jointly.
Manchin supports a scaled-back version of the child tax credit.
Manchin reportedly thinks that the increased child tax credit is too generous.
"Do you believe people making $200,000 and $400,000 would still get the child tax credit the same as someone making $50,000, $60,000 or $70,000 that really needs it?" Manchin said in December during a West Virginia radio show.
Manchin has said he would support a scaled-down version of the 2021 child tax credit that would cap eligible family income at $60,000 and include a work requirement for the monthly child tax credit payments, Fortune reports.
The IRS is sending letters to taxpayers who received monthly child tax credit checks.
The IRS started sending letters to parents who have received the monthly child tax credit payments. Letter 6419 includes the total amount of advance child tax credit payments the taxpayer received in 2021 and the number of qualifying children used to calculate those advance payments.
Taxpayers who receive a Letter 6419 should keep it so that it can be used to reconcile their 2021 tax returns, the IRS states.