March 25, 2022 –Hispanic Solutions Group
As is common knowledge, millions of American families received their last child tax credit advance payment for 2021 this month, and that check could also be the last to be sent, as talks on an extension continue to stall in Congress. from the USA
President Joe Biden’s nearly $2 trillion Build Back Better social spending bill would have extended expansions due this year to tax break until next year 2022 by:
Increase the maximum credit households can claim to $3,600 per child age 5 and under and $3,000 per child age 6-17; Make the credit fully refundable; and Distribute families’ eligible credit through monthly checks throughout 2022.
But that plan is in limbo, after the chief executive on Sunday lost what likely would have been a key tie-breaking vote to Sen. Joe Manchin, a Democrat from West Virginia. The lawmaker said in a news outlet appearance that he could not support the bill due to lingering concerns about rising inflation and the price of the legislation, it was reported. However, experts say the expansions This year’s elections were perhaps the most bipartisan of any safety net, giving hope that an agreement could eventually be reached to renew the program that helped lift an estimated 40 percent of children out of poverty. of the Center for Budget and Policy Priorities.
Here’s what you need to know about the child tax credit as the calendar shifts from 2021 to 2022, including what it will look like in the new year, how it might affect the 2022 filing season, and whether an extension is likely.
What the child tax credit will look like in 2022 The news is that the child tax credit will not go away. But without congressional intervention, the program will return to its original form in 2022, which is less generous:
A credit of $2,000 per dependent under the age of 17;
Income thresholds of $400,000 for married couples and $200,000 for all other filers (single filers and heads of households); and
A partial refund of 70 percent that affects people whose tax bill is below the amount of the credit.
Will Congress approve more monthly child tax credit payments?
That’s not to say that Congress won’t take additional action to reinstate the $1,000 or $1,600 top-up and once again send monthly checks to eligible families. For now, though, that depends on the future of Biden’s Build Back Better plan, which faces a roadblock in the Senate without Manchin’s support. The bill on November 19 passed the House of Representatives nearly four days after Biden signed his $1 trillion infrastructure bill into law, according to media reports.
I cannot and cannot vote to continue this legislation, Manchin told Fox News. “I have tried everything humanly possible. I can’t get there.
Biden administration officials were surprised by Manchin’s statement, with White House press secretary Jen Psaki calling Machin’s comments a sudden and inexplicable shift from previous conversations with key Democratic leaders. Biden, however, has stressed that negotiations between Manchin, House Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer will continue, though he added that lawmakers are unlikely to return to the floor. before 2022.
“Time is needed to finalize these agreements, prepare the legislative changes and finalize all the necessary parliamentary and procedural steps to allow a vote in the Senate,”
the president said in a speech on December 16.
Lawmakers had hoped to pass the bill before Christmas, so payments could resume in January. That no longer seems possible, with lawmakers now on a vacation break until the end of the year.
How the expanded child tax credit could affect 2022 filing season Eligible households will be able to claim the remaining half of the child tax credit they’re eligible for when they file their 2021 taxes. How much does that expansion affect you, though? depends on whether you opted out of the six-month advance credits and whether you were eligible for the expanded credit based on your 2021 income. If you received the monthly credit and were also eligible for the full expansion, you may notice that you don’t you get as big a CTC on your tax return as you used to, though that’s only because you’ve already received half. Families who used the six monthly advance payments can expect to receive $1,800 for each child age 5 and under and $1,
On the other hand, eligible households can expect a sizeable credit if they opted out of advance payments and also qualify for the full amount. That would mean they can claim the full credit when they file their 2021 taxes: $3,600 per child under the age of 6 and $3,000 per child between the ages of 6 and 17.
Will the IRS require households to repay overpaid child tax credits?
It emerged that, unlike stimulus checks, the Internal Revenue Service (IRS) will reconcile overpayments. That means if your income improved in 2021 or you claimed fewer dependents in the tax year than the IRS knew about, you’ll have to pay off the overpayments with your 2021 tax return.
Not all families were eligible for the expanded portion of the credit. Single filers’ income could not exceed $75,000, heads of household income could not exceed $112,500, and married couples could not earn more than $150,000 to be eligible for the additional $1,000 or $1,600. After that, the tax exemption was reduced by $50 for every $1,000 above the income threshold. The IRS used the most recent information available to it to determine the eligibility of
the families. That could have been their 2020 tax return, or other proactive families could have updated their income and family information through one of the agency’s online portals. However, others may not have acted, putting them at risk of losing part of their refund or having to pay back some of that money.
Experts say families in few circumstances will have to worry about repaying those payments, either with their tax refund or out of pocket. The credit had high income thresholds for the base amount of $2,000 and the program also had a buffer by design, since families only received half of the credit through six monthly installments. However, families may experience some inconvenience if they receive money for a dependent they no longer claim.
What Taxpayers Should Do Next
Hope for the best, but plan for the worst: American families should plan for the possibility, not the probability, that these child tax credit payments will be extended. That means continuing to control your spending, paying down debt and contributing to an emergency fund — though that’s easier said than done as millions of people grapple with the lingering financial impact of the pandemic.
Watch for any communication from the IRS:
The agency will send letters to households in January 2022 that will indicate how much money they received in 2021 through advance payments and help them determine if they received more than they are eligible for.
Recover missing payments when you file your 2021 taxes:
Americans will have a chance to reconcile the missing advance payments they were supposed to receive in 2021 by completing what’s called a Form 881.
Some Americans may still be waiting for their final payment: if you receive your
advance payment like a paper check, there is a chance that you are still waiting for that money even today. The IRS recommends waiting four to nine weeks before requesting a payment follow-up.
Show up early and work with a professional: since 2021 was another fiscal year
unprecedented, experts stress the importance of starting early to ensure you have enough time to track through all your documents and get your questions answered. The sooner you file your 2021 taxes, the sooner you can receive the refunds you’re eligible for.
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