HomePersonal FinanceTax Credits for Children Will Drop from $3,600 to $2,000 in the...

Tax Credits for Children Will Drop from $3,600 to $2,000 in the Near Future

The 1.9 trillion dollar American Rescue Plan Act was passed by President Biden soon after he took office in 2021.

As part of the package of aid, the child tax credit was increased from $2,000 to $3,000 for children ages 6 to 17, and from $2,000 to $3,600 for children under the age of 5, Yahoo reported.

Congress ordered the IRS last year to send parents eligible for the tax advances either $250 or $300 a month from July through December as opposed to waiting for tax filing season in 2022.

The last installment of these monthly checks went out to 36 million families last month.

It is still possible for parents to claim the remainder of their child’s tax credit for 2021 this tax season. Unless Congress acts, the expanded child tax credit of $3,000 and $3,600 will revert back to its pre-2021 level of $2,000 per dependent.

“The new child tax credit enacted in the American Rescue Plan is only for 2021. That is why President Biden strongly believes that we should extend the new child tax credit for years and years to come. That’s what he proposes in his Build Back Better agenda,” these are the words of the Biden team on the White House website.

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According to the most recent Plan Build Back Better, the child tax credit will be expanded for the 2022 tax year. While it has been clear Sen. Joe Manchin (D-W.Va.) doesn’t support the proposal, he isn’t thrilled about the expanded child tax credit.

“I have always said, ‘If I can’t go back home and explain it, I can’t vote for it.’ Despite my best efforts, I cannot explain the sweeping Build Back Better Act in West Virginia, and I cannot vote to move forward on this mammoth piece of legislation,” wrote Manchin in a statement in December.

With the reconciliation process, Democrats could pass the Build Back Better bill without a single Republican vote in the U.S. Senate. For that to happen, however, all 50 Senate Democratic Caucus members must vote in favor, including Manchin.

Therefore, Congress is operating under the assumption that the child tax credit will fall to $2,000 for tax year 2022 due to Manchin’s opposition to the bill (if the new proposed bill is not passed).

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