The Monthly Child Tax Credit Payments Have Come to an End; Here’s What Will Take Their Place.
The $1.9 trillion American Rescue Plan, which President Joe Biden signed into law in March 2021, provides for those checks as a temporary solution. For a year, the economic aid package increased the child tax credit from $2,000 to $3,000 per dependent ages 6 to 17, and from $2,000 to $3,600 for children under the age of 5. Unlike prior years, up to half of that money could arrive early thanks to monthly tax advances (called cheques) of $250 or $300 given between July and December.
When they submit their 2021 tax return this year, eligible parents who got monthly advances will still earn up to half of the total credit.
But how will the lapsed benefit be replaced? The child tax credit for 2022 (which you’d receive if you filed in 2023) is currently set to revert to $2,000 for each dependent age 17 or younger. Because neither the enhanced benefit nor the monthly payments were extended by Congress, the benefit is slated to expire.
However, the IRS has yet to announce the 2022 benefit income cutoffs. Not to mention, there’s still a chance Congress will act before the child tax credit’s payout amount reverts to what it was before 2021.
Democratic leadership is still pushing for passage of the Build Back Better plan, a reconciliation package that has been in the works for more than six months. The bill would extend the 2021 child tax credit for another year in its current form. Senator Joe Manchin (D-W.Va.), a centrist, is opposed to both the bill’s size and the idea of extending monthly child tax payments.
To pass a reconciliation bill in the face of unified Republican opposition, every Democratic Senator would have to vote yes. After all, Democrats only have a 50-50 split chamber because of the Vice President’s tie-breaking vote. Democratic leadership is unlikely to approve the bill without Manchin’s support.
Before publicly opposing the measure, Manchin allegedly warned the White House that he would only support keeping the monthly child tax credit payments if it included a “work condition” for parents and capped payments to households earning less than $60,000.
Millions of Americans would lose out if Manchin’s $60,000 income restriction became law.
This year, single filers with modified adjusted gross incomes of less than $75,000 and couples filing jointly with incomes of up to $150,0000 received the enhanced child tax credits ($3,000 for children ages 6 to 17, and $3,600 for children ages 5 and under). Earners earning more than that might still get a $2,000 credit, but those earning moreover $200,000 per single filer and $400,000 per household were fully phased out.