Individual Taxes
Tax News
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4 min. read

How the Child Tax Credit will affect you in 2022

Here’s how to claim the credit whether or not you received advance payments last year.

Millions of families received advanced Child Tax Credit payments last year. There aren’t any plans to offer advanced payments in 2022, but you can squeeze more money out of the credit this year.

You can claim the rest of the Child Tax Credit by filing your tax return this year. Anyone who qualifies can receive more money this year, regardless of whether they received advance payments.

Reporting the credit will look a little different this year. Here’s what you need to know to get the rest of your money.

 

How will the Child Tax Credit affect my tax refund?

You’ll probably get a smaller refund than you’re used to if you opted for advance payments. If you didn’t, you might receive a larger refund than usual because the amount increased.

Receiving the advance payments was like taking money out of a savings account. The maximum credit amount was $3,000 per child under 6 years old, and $3,600 per child from 6 to 17 years old. You took half of that out early (if you qualified for the full amount) for your monthly payments.

The max amount of $3,600 per child was an increase from the previous year’s $2,000 — which is why people who didn’t receive advance payments will probably get a bigger refund.

💰 Learn more about ways to save on taxes as a small business owner.

 

Another difference this year is that the credit is fully refundable. That means if your tax balance is $0 before the credit is applied, you’ll receive a refund for the amount of the remaining credit.

How to claim the credit on your tax return

All you needed to do in previous years to claim the Child Tax Credit was fill out Schedule 8812 on your Form 1040. The process is the same this year if you didn’t receive advance payments.

It’s different for people who received advance payments. The IRS will send you Letter 6419 in the mail by the end of January. The letter will tell you exactly how much in payments you received last year.

You’ll need it to accurately file your tax return this year and claim the rest of your tax credit. If you lost your letter, that information is also available on the IRS’s Child Tax Credit Update portal. If you put an incorrect amount on your tax return, you might not receive a full refund.

 

If you want your refund as soon as possible, you’ll have to file your return as soon as possible. Tax season officially begins Jan. 24. The IRS is already expecting major delays on processing tax returns — so plan to file early.

Can I receive advance Child Tax Credit payments in 2022?

Biden’s Build Back Better bill proposed extending the Advance Child Tax Credit payments to this year. However, the bill didn’t pass — so there are no official plans as of now to make it happen.

That doesn’t mean the Child Tax Credit is going away entirely. Although the advance payments are gone, you can still claim the remainder of the refund this year by filing your tax return.

Next year, the credit will still be available — but as of now, it’s set to max out at $2,000 per child again.

The bottom line

If you received advance Child Tax Credit payments last year, you’re still owed more money. But you have to make sure you file your tax return correctly.

Be on the lookout for Letter 6419, a document from the IRS that will tell you the amount in advance payments you received last year. Then file the amount accordingly on Schedule 8812 of your 1040.

Schedule a free call with a DiMercurio Advisors team member today and find out how you and your business can make the right moves to qualify for even more credits and deductions.

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