The child tax credit is a federal income tax credit that helps offset the costs of raising children. It was originally introduced in 1997 to help reduce child poverty, and has been updated several times since then. A new child tax credit will be available starting in 2022, but it's important to understand how it works. This blog post will outline the basics of what you need to know about this new child tax credit so you can plan accordingly for your family!
Though there are some important differences between the House and Senate versions, President Biden and Congressional Democrats want to extend current legislation in order for parents of children who deserve it most. They're pushing hard so that any future changes can be made before they expire at end 2021- this includes those tax credits enhancements!
The Build Back Better Act is a great way to help families with children. Some people might be better off under this new proposal than they were before, while others may not feel as strongly about it and therefore need more information from Congress on what will happen in order for them make up their minds whether or not the changes are worthwhile making next year's tax return filing status dependant upon how much income you have; if any children live at home with one parent due lack of custody arrangements (or some other factor).
For 2021 and only in this year, the child tax credit was improved substantially. The amount jumped from $2k to 3K for children six years old or older (the additional year being added onto their upper age limit), as well it became fully refundable so that any refunds triggered by using it can be over 1,400 dollars.
The new child tax credit will be more generous in 2022. The 2021 version of the Build Back Better Act provides only six monthly payments this year from July to December but in 2022, the payments would be distributed over the entire year.
The taxpayers who filed taxes this year will have a chance to earn back some of their lost money thanks to the Build Back Better Act. If your modified AGI is over $75,000 for single filers or head-of household it's possible you could be denied payments in 2022 unless an exception applies - there are quite many factors involved with deciding eligibility so please contact us if need help determining what applying means!