Child Tax Credit Changes For The 2022 Tax Year
There were major changes made to the Child Tax Credit for 2022 that affected filers. This year, the credit will go back to its pre-2021 version. What does this mean for you? This blog post will help you understand what changes were made so you can be prepared this tax season.
What is the Child Tax Credit?
The Child Tax Credit uses a parent's modified adjusted gross income to generate a partly refundable tax credit. A partly refundable credit means that you can get a portion of it even if you do not owe any income taxes for the tax year. This means that a parent who qualifies for the credit and pays taxes can claim it.
Who qualifies for the Child Tax Credit?
You can claim the Child Tax Credit for each qualifying child with a valid Social Security number in the United States.
To be a qualifying child for the 2022 tax year, your dependent generally must:
- Be under age 17 at the end of the year
- Be your son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant of one of these (for example, a grandchild, niece, or nephew)
- Provide no more than half of their financial support during the year
- Have lived with you for more than half the year
- Be properly claimed as your dependent on your tax return
- Not file a joint return with their spouse for the tax year or file it only to claim a refund of withheld income tax or estimated tax paid
- Have been a U.S. citizen, U.S. national, or U.S. resident alien
You qualify for the full amount of the Child Tax Credit for each qualifying child if you meet all eligibility factors and your annual income is not more than:
- $150,000 if you are married and filing a joint return, or if you are filing as a qualifying widow or widower;
- $112,500 if you are filing as a head of household; or
- $75,000 if you are a single filer or are married and filing a separate return.
Can all parents claim the Child Tax Credit?
Parents must file taxes and meet residence and income standards to receive the Child Tax Credit.
Parents who have their primary residence in the United States for more than half of the year and have children younger than 17 on the year's final day will satisfy the residency condition. U.S. military members and federal employees stationed outside the United States are also eligible.
What changes were made to the Child Tax Credit?
Because the Child Tax Credit is reverting to its pre-2021 version, the 2022 credit amount drops to $2,000 per child. Last year, it was $3,000 for children 6 to 17 years of age and $3,600 for children five years old and younger.
This year, children 17 years or older are not eligible for the credit because the previous age limit of 16 years old has been reinstated. For some lower-income taxpayers, the 2022 credit is only partially refundable — up to $1,500 per eligible child. They must have earned an income of at least $2,500 to take advantage of the credit's restricted refundability. In addition, there will be no monthly credit advance payments in 2022.
How can Taxfyle help?
Taxes are some of the most stressful parts of managing your finances. Laws regularly change, and the IRS is investing more in auditing filers; mistakes could be costly. With Taxfyle, you can ensure your taxes are filed correctly without stress.
We connect individuals like you with qualified accountants that can take the busy work off your hands. When it comes to filing taxes, there’s no better feeling than knowing the work is completed by a professional. This tax season, get a Pro’s help.