The Internal Revenue Services began distributing sixth round of direct payments for the expanded child tax credit in mid-December, concerned families in the United States realizing this was the last batch planned by the American Rescue Plan (ARP). Now, however, it is possible that some of those parents will receive a payment worth up to $ 8,000 in 2022.
What is the stimulus payment of $ 8,000?
For parents who have an adjusted gross income of less than $ 125,000 and have two or more children under the age of 13, the additional money may be made available. Known as the tax credit for children and dependents, its goal is to help families provide care and support for their children by offsetting other costs.
Congress passed the US bailout package in March, and the $ 1.9 trillion bailout package expanded the decades-old child tax credit program to include direct monthly payments for the first time. However, only one year of funding has been secured, and unless Congress is able to approve an extension by December 28, monthly payments will end with the December payment.
“The credit is calculated according to your income and a percentage of the expenses you incur to take care of eligible people in order to allow you to go to work, to look for work or to attend school”, announced the ‘IRS.
Payment in the new year, which could go up to $ 8,000, can be used to cover expenses including babysitters, transportation, housekeepers, day camps or day care, as well as before and after school programs. The money can also be used to care for a disabled dependent.
“Our new poll shows that a majority of voters support the expanded child tax credit, which has helped keep families above water, supported local small businesses and boosted the global economy.” @ExpandCTC https://t.co/biVdIKIWd9
– Common dreams (@commondreams) 23 December 2021
As a potentially refundable payment, it is also possible that taxes on it may not be required to be paid. Also note that the money will not be issued automatically, eligible households will have to request it using form 2441. More information is available on the dedicated IRS page.
Child tax credit and income tax return
For months, Congress debated the future of President Biden’s Build Back Better bill, a legislative package that includes a one year extension for the enhanced child tax credit. But regardless of whether this extension materializes, recipients of the child tax credit will have a credit to claim when they file their taxes in 2022.
As of July, the IRS has been sending families monthly checks worth $ 300 for children five and under and $ 250 for those aged six to 17. The monthly payments from July to December were the first six months of provision, but the ARP provided a full year of the boosted program.
Imagine what our situation would be if the Democrats hadn’t won those two Georgia Senate seats in 2020. We wouldn’t get anything. Not the US $ 1.9 rescue package, not the infrastructure bill, not the record number of judges who have been confirmed. Nada.
– David Rothkopf (@djrothkopf) December 19, 2021
The remaining six months of the expanded child tax credit will come single end-of-year tax credit, to be claimed when filing income tax in 2022. This means that parents still have a tax credit of up to $ 1,800 per child to reduce their 2021 tax bill or increase their refund amount. tax.
How to claim the child tax credit when filing in 2022?
At the start of 2022, you’ll need to file your income tax returns for the previous year, and you’ll have the option to claim the remainder of the expanded child tax credit. The IRS has confirmed that it will send Letter 6419 to child tax credit recipients in January, outlining the remaining credit they have.
The letter will tell you how to make sure you get your full entitlement to the child tax credit when you file, as well as the amount of payment you can expect. You should keep the letter and you may need to refer to it when filing income tax.
You should also keep in mind that any child tax credit advance payments you received in 2021 are not considered income, which means the payments will not be taxed for anyone who qualifies.
The only exception is if your 2021 revenues exceeded initial estimates and you exceed the income threshold for eligibility. In this case, you may need to repay some of the money received from the child tax credit.