The boosted child tax credit (CTC) returns to its pre-eminent levels of 2021: about $2000 per eligible child that falls under 17. It is due to the lagged path of the Build Better Act in the form of an annual tax credit.
The 17-year-olds neither will have the advanced monthly payments nor will they qualify for the credit. The guardians or parents would have to file a tax return for meeting the criteria for the credit of the next tax season. It would be no longer fully refundable and fall significantly short to $2,000 as compared to those in 2021 – $3,000 to $3,600.
Over a thousand million of the population do not qualify for the credit at the moment and roughly 35 million have already missed their monthly payments as a result.
The credit was enriched in 2021 under the Democrats’ American Rescue Plan that was signed into law by President Joe Biden.
A yearly extension of the credit was futile as it was faced by the opposition to Build Black Better from Sen. Joe Manchin, D-W.V. For achieving the milestone of this legislation Democrats need all 50 senators on board.
It has been revealed by the studies that the monthly CTC payments played a significant role in coping with child hunger and child poverty within the country.
The experts highlight the grave situation which might be faced with the reversal of these payments. It is because families who are in need of money will no longer qualify for the credit as they do not meet their minimum earned income, $2,500.
Children living in poverty would qualify to meet the reversed criteria of child poverty if the expansions are put on hold over the next year, according to a report by the Center on Budget and Policy Priorities.
Can it still be supplemented in 2022?
Jorge Castro, a partner at the Washington D.C.-based Miller & Chevalier law firm and a former Democratic staffer on the Ways & Means committee opines that it can be made possible if a standalone bill or Build Back Better is passed by Congress. It will result in augmenting the credit for 2022 or an analogous structure to 2021 where the monthly payments were disbursed in the mid of the year.
Castro adds the process of transmitting payments can be eased as the IRS has already managed the infrastructure for the payments of 2021. However, the supplementary legislative requirements could delay the payments as the IRS had to integrate them in the payment system.
If additional legislation is introduced to make the payments more efficient, such as requiring work requirements or limiting income, as floated by Manchin, then the IRS is likely to delay the payments even further, since it will need to implement the policies into its payment system.
Castro also says that because Congress typically passes legislation that does not go into effect in the future, the lower the likelihood Congress will pass legislation that retroactively goes into effect. He claims the current spike in Covid-19 cases across the country could lead Congress to re-evaluate its priorities once the lower and upper houses return to session.
The question one needs to ask in this instance is whether now is the right time to drastically reduce child tax credit relief? He asks. That should be the one question we ask.”.
There are currently millions of families in the U.S. who have received their final child tax credit advance payment for 2021 this month – and this could also be the last payment since talks about an extension continue to stand still in Congress.
Distributing families’ eligible credit through monthly checks for the entire 2022 tax year has been delayed due to Congress continuing to stall on an extension.
The presidential administration has made it clear that it is unlikely that the enhanced, monthly child tax credit (CTC) will be extended into 2022 if Senate Democrats fail to reach an agreement on Bill Joseph Biden’s Build Back Better.