This 2022 Child Tax Credit Change Could Impact Your Payments in a Big Way

The expanded child tax credit Joe Biden signed into law as part of the American Rescue Plan has drastically reduced child poverty for millions. And for millions more, it provided much-needed relief at a tenuous economic time.

This reality should mean it’s a no-brainer to keep the expanded child tax credit going, but unified GOP opposition and acrimonious discussion among Democrats on how to keep the child tax credit going has made it harder. An extension of the policy is still possible, even probable in Biden’s Build Back Better Plan, but there are some changes in how the program works.

For example, the program has only been extended for a single year, not the five that Biden wanted or the permanent extension sought by progressive Democrats. But as things currently, stand it’s slated to end at the end of the year.

The inclusion of the child tax credit in the framework released by the White House last week does bode well for its eventual extension. But even if it does pass, the 2022 credit will differ from the 2021 version in a significant way.

Both Business Insider and Kiplinger report that one of the most popular aspects of the credit—that half of it can be paid out as monthly payments—won’t be available to all recipients under the terms of the framework put forth by the Biden administration.

Single filers making $75,000 or more, heads of household making $112,500 or more, and joint filers making $150,000 or more in adjusted gross income will no longer be eligible to receive half of their tax credit as monthly payments made via mailed checks or direct deposit.

Instead, though households with income over those thresholds will still receive their credits, they will be paid just how the pre-2021 child tax credit was: as a lump sum upon filing taxes, a major departure from the current structure of the credit.

The other big change in the framework — and one that’s more positive, frankly — is that the Biden plan makes the refundability of the child tax credit permanent, even if its greater value expires eventually. That’s a huge deal, as it ensures that the poorest Americans (those who pay nothing or nearly nothing in taxes) remain eligible for the child tax credit.

Taking away the flexibility and utility of the monthly payments from some of the taxpayers who’ve been receiving them is a shame, but parents who were expecting extra barriers like lower income limits and a work requirement (as Sen. Joe Manchin pushed for) will likely be happy to keep receiving the benefit at all, as it’s still very possible that Democrats don’t agree on a final bill and the expanded child tax credit ends less than a year after it was initially passed.