Let’s talk about the Child Tax Credit
Last year we sat down with CityMom (and tax savant) Victoria to answer all of your Child Tax Credit questions. We’re chatting with her again to bring you the 411 before you file for 2021.
How has the child tax credit changed from last year to this year?
The advanced payments were a one-time thing that occurred in 2021 and therefore are reconciled in your 2021 tax return (filed in 2022). The higher tax credit, and the credit being fully refundable, were also a one-time change. At least for now! Basically, the child tax credit will be the same in 2022 as it was in 2020 unless Congress makes any of the changes permanent. There are talks of the credit being expanded permanently, but that’s not set in stone.
If a CityMom declined the tax credit for herself, but still received payment and a letter, what gives?
If you file a joint return, both taxpayers had to opt-out of the advance payments. The credit is assumed to be divided equally between each taxpayer, and therefore required both taxpayers to opt-out.
Need a refresher? Check out What is the Child Tax Credit?
Will the credit continue in 2022?
As of now, NO. All of the changes in 2021 were temporary. Again, unless Congress makes it permanent.
What are the "must-know" takeaways for the 2021 tax return?
If you received the advanced payments of the child tax credit, don’t be surprised if your tax refund is less than normal.
Additional reading on the Child Tax Credit - Victoria approved! - can be found here:
https://www.mother.ly/life/career-money/advice-for-parents-filing-2022-taxes/
