Child Tax Credit – Changes to Expect This Year

Child Tax Credit - Changes to Expect This Year

Welcome to tax teach today I want to Talk about the child tax credit and the Change in the credit from 2021 to 2022. To provide some background in 2021 Congress signed the American Rescue plan Act which among other things hoped Increase the child tax credit Now the reason behind this was in 2021 If you can recall inflation was very High and this impacted a lot of Americans and Congress wanted to help Alleviate some of that pressure by Increasing credits like the child tax Credit for the 2021 tax year so in 2021 If you had a kid that was under the age Of six you could get a child tax credit In the amount of three thousand six Hundred dollars Also if you had any children that were 17 or younger you could get a child’s Tax credit in the amount of three Thousand dollars this is all dependent On how much income you make if you make Over a certain amount you might not be Able to take the full child tax credit I Have a little video going on over this And you should see a link showing up now Anyways that was the first thing the 2021 child tax credit did second thing The child tax credit changed in 2021 did Was it made the child tax credit fully Refundable I’ll give you example to show you what That means let’s say you had a you had

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Taxes due in the amount of two thousand Dollars but you also had a kid that was 16 years old You would apply that child tax credit of Three thousand dollars assuming that you May you meet the income requirements to Take the credit three thousand dollars And apply it against your two thousand Dollar tax liability right the Difference between your tax liability of Two thousand and your child tax credit At three thousand that one thousand is Money given to you by the IRS right you Paid off your you paid off your tax Liability down to zero the two thousand But you also have a refundable amount of One thousand so it’s essentially like The IRS giving you a thousand dollar Payment this was meant to help with Increasing price of goods in 2021 due to Inflation the third thing that the American Rescue plan acted for the child Tax credit was that If you had a 17 year old you could apply The child cash credit before 2021 if Your child was 17 you cannot take the Child tax credit it had to be your child Had to be 16 and younger so it’s a small Nuance but that’s what the American Rescue plan act did for the child tax Credit in 2021. also a thing to note is The advanced child tax credit payments Uh process that was allowed in 2021. Typically you’d receive your child tax

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Credit when you file your tax return but The American Rescue plan act allowed for You to receive payments before you filed Your tax return throughout the year just As Nuance to know the difference between 2021 and 2022 is you will not get the Same Advanced child tax credit payment Process for the 2022 tax return there no Longer is that three thousand dollar tax Credit if you had children that were 17 And younger or the 3 600 tax credit if You had a child that was under the age Of six now for 2022 you can only get a Max child tax credit around two thousand Dollars so quite a big change between 2021 and now just something to note when You file your tax return also another Slight Nuance is in 2021 if your child Was 17 or younger you could take the Credit child tax credit but now in 2022 Your child has to be younger than 17 in Order for you to take the child tax Credit Another thing to note is the ability the The amount of the credit that is Refundable in 2021 the credit was fully Refundable which which I highlighted in The example earlier on in the video now Only one thousand five hundred dollars Worth of the credit is refundable Quite a bit difference between the fully Refundable amount in 2021 thing to note Summarize the two major changes from the 2021 child tax credit to the 2022 tax

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Credit is a change in the overall Maximum amount of child tax credit you Can receive from three thousand six Hundred dollars in 2021 sent out two Thousand dollars in 2022. also your Ability to take a refundable credit went From the full amount in 2021 to only at One thousand five hundred dollars in 2022. if you’re curious on how to fill Out the form I have a whole other video Going over how to fill out a child cash Credit form the form 8812 an icon should Be popping up and now where you can Click on the video and see how to fill Out the form let me know your thoughts On the change in child tax credit from 2021 2022 in the comments down below I’m Curious to know what your opinions on Are for the decrease in that child tax Credit That wraps up the video I hope you found This video helpful and informative if You liked the video hit the like button Lets me know that I’m creating great Videos for you all if you don’t watch Content like this in the future hit the Subscribe button it’s free and it keeps You up to date on all videos I post in The future Thanks again for watching and I’ll see You all next video [Music]

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