Will the Child Tax Credit Be Extended for 2022?

Without congressional intervention, the benefits many families receive from the child tax credit may change.

Earlier this year, President Joe Biden delivered on his promise to provide significant help to American families. On July 15, his new coronavirus stimulus package went into effect, giving up to $300 per month per child to parents across the country. However, as the year comes to a close, many American families are wondering: what now? What comes next? Here's everything you need to know about the child tax credit and if the benefit will be extended into 2022.

What Is the Child Tax Credit?

Each month, depending on income level, parents of children aged 5 and under received up to $300 and parents of kids aged 6 and 17 received up to $250. That's a total of $3,600 for each child under age 6 and $3,000 per year for each older child (between ages 6 and 17). The payments began on July 15 and were issued monthly through December, and about 39 million households received the payment, either through direct deposit, paper checks, or debit card.

"The American Rescue Plan is delivering critical tax relief to middle class and hard-pressed working families with children," said President Biden in a statement. "With today's announcement, about 90 percent of families with children will get this new tax relief automatically, starting in July."

How Does the Child Tax Credit Work?

Payments for the child tax credit came from a preexisting system, i.e. parents received monthly payments from the Internal Revenue Service (IRS). Unlike one-time coronavirus payments, this program continued for an extended period of time, running from July to December 2021. It helped many make ends meet in a period of instability and uncertainty. Research on the expanded credit suggested that the plan could (and would) cut child poverty in half in the United States. And President Biden stated he wants Congress to approve the American Families Plan—a $1.8 trillion economic package that will extend the payments—for four more years.

"While the American Rescue Plan provides for this vital tax relief to hard working families for this year, Congress must pass the American Families Plan to ensure that working families will be able to count on this relief for years to come," Biden said in the statement. "For working families with children, this tax cut sends a clear message: help is here."

An image of a stimulus check on a colored background.
Getty Images (1).

Who Received the Child Tax Credit?

Single parents making up to $75,000 a year, heads of household making up to $112,500 a year, or couples who make up to $150,000 a year were eligible to receive the full amount. Those earning more received less, according to their income bracket. There was also no minimum income. Child tax credits currently leave many families out, so the new expanded credit gave a break to the millions of families who don't earn enough money to use the credit.

Will the Child Tax Credit Be Extended for 2022?

While President Biden wants the child tax credit to be extended for 2022, the Build Back Better Act—which contains this provision— has not yet been passed. Democrats Joe Manchin and Kyrsten Sinema have vocally opposed the bill, which decreases its chances of passing.

The good news is that many will still qualify for the standard child tax credit, which is $2000 per child per year. However, monthly advanced payments will cease.

What Happens Next?

Parents who received fully refundable child tax credit payments in 2021 should be on the lookout for a letter in the mail explaining how the payments should be applied to next year's tax return. The letter, dubbed "Letter 6419," will be mailed later this month and will continue into January.

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