The Child Tax Credit expanded temporarily, then returned to its previous form

The Senate did pass changes to the Child Tax Credit, but not a permanent expansion. In December 2021, Congress passed the American Rescue Plan, which temporarily increased the credit from $2,000 per child to $3,600 for children under 6 and $3,000 for children ages 6 to 17. This expansion ran only through 2021. Starting in 2022, the credit went back to $2,000 per child, where it remains today unless Congress passes new legislation.

The temporary expansion also changed how the credit worked. For 2021 only, the IRS sent monthly payments to families rather than requiring them to claim the full amount on their tax return. Families received half the credit as advance payments from July through December 2021, then claimed the remaining half when they filed their 2021 tax return. This structure did not continue into 2022 and beyond.

Key Takeaways

  • The Child Tax Credit was temporarily increased to $3,600 per child under 6 and $3,000 per child ages 6 to 17 for the year 2021 only.
  • The IRS sent half of the 2021 credit as monthly payments from July through December 2021, with the other half claimed on the 2021 tax return.
  • Starting in 2022, the credit returned to $2,000 per child and is claimed only on your tax return, not paid monthly.
  • No permanent expansion has passed Congress since the temporary 2021 increase ended.

What the 2021 expansion included

The American Rescue Plan increased the credit amount and changed the payment structure for one year. Families with children under 6 received $3,600 per child. Families with children ages 6 to 17 received $3,000 per child. The income limits also changed: the credit began to phase out at $400,000 for married couples filing jointly and $200,000 for single filers, compared to the previous limits of $440,000 and $220,000.

The monthly payment feature was the most visible change. The IRS mailed or deposited $300 per month for each child under 6 (totaling $1,800 from July through December) and $250 per month for each child ages 6 to 17 (totaling $1,500 from July through December). Families then claimed the remaining $1,800 or $1,500 on their 2021 tax return filed in 2022. This meant the full credit was split between advance payments and the tax return claim.

Why the expansion ended after 2021

The American Rescue Plan was designed as temporary pandemic relief. Congress set the expanded credit and monthly payment structure to expire after December 31, 2021. Extending the expansion would have required a separate vote and new legislation, which did not happen.

Several proposals to extend or make the expansion permanent have been introduced in Congress since 2021, but none have passed both chambers and been signed into law. Some proposals would have extended the higher amounts through 2025 or made them permanent. Others would have kept the monthly payment feature. As of now, none of these proposals have become law.

The current Child Tax Credit (2022 and later)

The credit is now $2,000 per may have access to child under age 17. The income phase-out thresholds returned to $440,000 for married couples filing jointly and $220,000 for single filers. You claim the entire credit on your tax return when you file — there are no monthly advance payments.

To claim the credit, you must have earned income, a valid Social Security number for each child, and a may have access to relationship to the child (parent, grandparent, or legal guardian in most cases). The child must be a U.S. citizen, national, or resident alien. You report the credit on Form 1040 or 1040-SR when you file your federal tax return.

How to claim the credit on your tax return

When you file your federal tax return, you list each may have access to child and their Social Security number. The IRS uses this information to calculate your credit. If your tax liability is less than the credit amount, you may receive a refund for the difference, up to $1,600 per child (the refundable portion of the credit).

You can file your return yourself using tax software, work with a tax preparer, or use free filing services if your income is below a certain threshold. The IRS Free File program offers free tax preparation software to households earning $79,000 or less. Many community organizations and libraries also offer free tax preparation help.

What happens if Congress passes a new expansion

If Congress passes legislation to expand the Child Tax Credit again, the IRS will announce the changes and provide instructions on how to claim them. Any new expansion would likely be announced before the tax year begins, so you would know the rules before filing your return.

You can check the IRS website (irs.gov) or the Treasury Department website for announcements about changes to tax credits. Many nonprofit organizations that focus on tax policy and family support also track proposed changes and announce them when they pass.

Frequently Asked Questions

Can I still get the expanded credit amount from 2021 if I didn't receive it?

If you did not receive the monthly payments in 2021 but were may have access to to them, you could claim the full credit on your 2021 tax return when you filed in 2022. If you already filed your 2021 return without claiming the full amount, you can file an amended return (Form 1040-X) to claim the credit you missed. The deadline to amend a 2021 return is generally three years from the original filing date.

Will the expanded credit come back?

That depends on whether Congress passes new legislation. Several proposals have been introduced, but none have passed both chambers since the 2021 expansion ended. You can monitor Congress's website (congress.gov) or advocacy organizations focused on tax policy to track any new proposals.

What if my income changed since 2021?

Your income in the year you claim the credit determines whether you can claim it and how much you receive. If your 2022 income was above the phase-out threshold, you may not have been able to claim the full $2,000 credit. If your income dropped, you may now be able to claim more. Report your actual income for the year on your tax return.

Do I have to report the 2021 advance payments I received?

You do not have to repay the advance payments you received in 2021, even if your income changed or you were not may have access to to the full amount. However, if you received more in advance payments than you were may have access to to based on your final 2021 income, you may owe back some of the overpayment when you file your 2021 return. The IRS reconciles this when you file.