If you’re a parent loving those 2021 child tax credit payments, get ready for some stimulus check changes in 2022. There are not many changes for most American families, but you may have to get some more information.
President Joe Biden’s Build Back Better Act is possibly working its way through Congress with some changes in store. Since 2020, there have been differences in each year’s payout.
2021: All About The Stimulus Checks
In 2020 amid the first year of the pandemic, the credit was worth $2,000 for each child age 16 or younger. Remember that fat check in the mail so long ago? If your income was over $400,000 ($200,000 for single or head of household), families were not eligible for the credit.
According to Kiplinger, that credit was partially “refundable” for some lower-income folks if the family income hit a $2,500 mark. With that credit, the IRS will send the income-earner a check if the credit is more than your income tax liability.
Now for 2021, you should have noticed your government payments over the past few months. In March 2021, the American Rescue Plan Act allowed for six monthly payments from July to December.
Those that got their first payment in July would see each payment equal 1/12 of your 2021 credit amount. That means $250 for kids six to 17 years of age with $300 for children five and under.
2022 Changes Coming Hard
Get ready for 12 monthly payments under the Build Back Better plan. Those ($250 and $300) maximums don’t change. Also, the IRS could be allowed to increase payments beyond those standard amounts if a family got them after January 2022.
But the thresholds have changed for some under the Build Back Better plan. If your adjusted gross income is too high in 2021, you won’t get those child tax credit payments in 2022.
If a single-income filer earns more than $75,000, they’re out. For head-of-household and joint filers, it goes above the $100,000 mark. That means $112,500 for head-of-household ($150,000 joint filers). There would be a possible exception to these marks if folks provided additional information to the IRS during the year.
So, the IRS needs more information to send you your stimulus checks. For 2021, they just went off your 2020 tax return. The upcoming year will still mean they’ll look at your tax return, but the IRS could adjust your child tax credit based on any additional information they have on you and your family.
What else is different? Well, the thresholds based on AGI are over the past two years.
With the Build Back Better plan, you can choose to have your 2022 tax credit phased out. What? Give back free money? Let’s say you got a race in 2020 or were out of work in 2021. You could ask the IRS to take another look at your income if you were over those 75, 112, and 150 thresholds.
Could families get refunded permanently? It’s possible with the new plan. Stay tuned.
If the IRS overpays families, some “safe harbor” rules will keep you from paying back enormous amounts. But Kiplinger’s said that could only happen if there’s no fraud or the intentional disregard of rules and regulations.
A few other things could change with 2022, but Congress must first solidify the Build Back Better plan.