What is the expiration of the child discount and how does it affect your payment?
YOUR child tax credit mainly depends on your income.
Last year, the Child Tax Credit (CTC) was temporarily increased to a maximum of $3,600 under the American Rescue Act.
However, because Congress failed to expand the CTC, it has since expired.
That means there will still be a federal benefit this year, but it will be smaller.
For taxpaying parents, the federal CTC is expected to reset to a maximum of $2,000 this year.
For the 2022 tax year, the money will be distributed from the previous program in the form of a one-off tax credit at the end of the year Internal Revenue Service (IRS).
Below we explain the income limits and how the exits work.
Income limits for child allowances in 2021
In 2021, Washington, DC officials temporarily expanded the CTC up to $3,600 to help families in difficulty.
From July through December 2021, the IRS paid half of the child tax credit amount in monthly prepayments.
Recipients then claimed the other half when they filed their 2021 income tax returns.
In 2021, couples qualified for the full payments if they earned less than $150.00, and single parents who register as heads of household were required to earn less than $112,500.
But there have been exits – one of which occurs after income exceeds those amounts.
For example, every $1,000 above these thresholds would reduce your child tax credit by $50.
With this exit, the credits would not drop below $2,000 unless the couples’ incomes reached $400,000 or $200,000 for all other filing statuses.
In the event that income exceeds this level, the second exit would kick in – meaning the $50 cut continues for every $1,000 above.
This could eventually exclude you from claiming the child tax credit in 2021.
Income thresholds for child allowances before 2021
Child tax credits will roll back to their pre-pandemic expansion.
This would result in the CTC going down to a maximum of $2,000 per child and no more monthly payments.
Prior to 2021, the $2,000 child tax credit began to be phased out if the joint applicant’s income was $400,000 or more and $200,000 for all other applicants.
The Sun reveals how high the child tax credit is and when you can get it.
You can also find out here how to apply for the child tax credit for 2022.
https://www.the-sun.com/money/4821479/child-tax-credit-phase-out-reduce-explained/ What is the expiration of the child discount and how does it affect your payment?