If you file a tax return and you have a child or dependents, you are likely very familiar with the Child Tax Credit. In 2021, it was temporarily expanded in response to COVID relief efforts and up to half of your available credit was delivered through systematic monthly payments. Although your income level ultimately determined how much you were eligible to receive, the 2021 credit was worth up to $3,600 per dependent.
I’ve learned many things as an Enrolled Agent with the IRS, but the one universal truth I know is that the only constant with our tax system is that things always change! So let’s address those changes for the Child Tax Credit…
For this tax year (2022), the credit is being reverted back to its original limit of $2,000 for every dependent under the age of 16. Additionally, the advanced monthly payments of your tax credit will no longer occur.
Income limits are also changing. In 2021, phase outs began once MAGI reached $75,000 (single filers) and $150,000 (joint filers). However, for 2022, the phase outs will begin at $200,000 (single filers) and $400,000 (joint filers).
Taxes can be complicated, but we are here to educate and prepare you each year. We feel that having the knowledge of tax law changes, such as this one, are vitally important for you to prepare for this upcoming tax season.