Child Tax Credit: Updates in 2022

What are the main updates on the Child Tax Credit in 2022? 

To get a background on the CTC, one must know the three main criteria to claim the 2021 CTC, which are:

1. Income: The CTC will start to decrease when you make $75,000 if single ($150,000 for married couples and $112,500 for heads of households). Each $1,000 of income above the phase-out level reduces your CTC amount by $50.
2. Taxpayer Identification Number: You and your spouse need to have an SSN or an Individual Taxpayer Identification Number (ITIN).
3. Qualifying Child: Children claimed for the CTC must be “qualifying children.”

Read more: Fourth Stimulus Check Update: Child Tax Credit Has Larger Chance?

To claim children for the CTC, they must pass the following “qualifying child” tests:

Relationship: The child must be your child, grandchild, stepchild or adopted child; younger sibling, step-sibling, half-sibling, or their descendent; or a foster child placed with you by a government agency. Note: if you are the child’s legal guardian, that is considered a child placed with you by a government agency.

Age: The child must be 17 or under on December 31, 2021.

Residency: The child must live with you in the U.S. for more than half the year. Time living together doesn’t have to be consecutive. There is an exception for non-custodial parents who are permitted by the custodial parent to claim the child as a dependent (a waiver form signed by the custodial parent is required).

Taxpayer Identification Number: Children claimed for the CTC must have a valid social security number (SSN).

Support: The child does not provide more than half of their own support in 2021.

Dependency: The child must be considered a dependent for tax filing purposes.

Read more: Can the Child Tax Credit Be Extended Until 2025? Yes!

The main updates for the Child Tax Credit for 2022 are as follows: 

1. Increases the tax credit amount. The tax credit’s maximum amount is $3,000 per child and $3,600 for children under 6.
2. Makes the credit fully refundable. Even if you don’t owe taxes, you could get the full CTC refund.
3. Removes the minimum income requirement. You can have zero income and still claim the CTC.

Read more: Child Tax Credit & Stimulus Check Update: IRS Says Some of You Ows $3,600 Payments Issued By Them

1. Raises the qualifying age. Children 17 and under can qualify for the credit.
   Provides advance payments. If you already qualify for the current CTC when you filed your 2020 tax return (which you file in 2021), you can start receiving part of the new credit during 2021.
2. You don’t have to wait until you file your 2021 tax return (which you file in 2022). The IRS will send you monthly payments for half your new credit between July and December 2021.
3. Lowers the phase out rate. The CTC amount will start to gradually decrease starting at $75,000 ($150,000 for married couples and $112,500 for head of household).

Read more: IRS: Technical Issues Delay Release of Advanced Child Tax Credit Payments

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