Will the enhanced child tax credit return in 2023?

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It’s hard to know for sure, but we have some clues.


Key points

  • The Child Tax Credit received a significant boost in 2021.
  • Although that boost is gone for 2022, lawmakers are still battling to bring it back.

In March 2021, lawmakers approved the US Bailout, a massive spending bill designed to provide relief during the pandemic. This bill provided for a third round of stimulus checks worth up to $1,400 each, and it also significantly increased the child tax credit.

Prior to 2021, the child tax credit had a maximum value of $2,000 per child, and only a portion of this amount was refundable. As a quick introduction, a tax credit is a dollar-for-dollar reduction in your tax liability. So if you owe the IRS $1,000 and can claim a $1,000 tax credit, you reduce your tax bill to $0.

Meanwhile, some tax credits are non-refundable, so they won’t pay you anything if you don’t owe the IRS money. The child tax credit was partially refundable before 2021, but last year it became fully refundable. In addition, its maximum value has increased to $3,000 for children 6 to 17 years old and $3,600 for children under 6 years old.

Additionally, half of the Child Tax Credit was paid in monthly installments that hit recipients Bank accounts from July to December. Normally, the child tax credit is paid in one go and recipients must wait to file a tax return to obtain it.

Lawmakers hoped to keep the strengthened child tax credit in place for 2022 so they could continue those monthly payments. And given soaring inflation this year, it would have been a good thing for cash-strapped families with a maximum credit card.

But unfortunately, the enhanced version of the Child Tax Credit was not approved for 2022. However, lawmakers still have it on their radars, and some are fighting to bring it back. So families don’t have to give up the idea of ​​subsidized credit just yet.

The push to bring back the strengthened child tax credit

The improved Child Tax Credit has helped many families consolidate their finances and has also resulted in a notable decrease in food inadequacy and child poverty rates. Once the boosted credit is gone, the most of that progress has been reversed.

This is something lawmakers have noticed. And it’s also why many are still fighting to bring back some sort of strengthened version of the child tax credit. It may not look exactly like the boost that was approved in 2021, but at this point any improvement is likely to be better than nothing.

That said, it’s hard to say whether the beefed up child tax credit will make a comeback in 2023. While lawmakers on both sides of the political spectrum seem to agree it’s necessary, there’s debate about how to bring this boost to life.

Some legislators, for example, want to impose a minimum income requirement for eligibility. But this change could mean that the most needy families in the country are not eligible to receive the increased credit, either at all or in full.

Families with children should not lose hope

There’s a reasonable chance that at some point lawmakers will approve an improved version of today’s child tax credit. But families with children should also remember that the credit didn’t disappear in 2022 — it just returned to where it was before. This means some households are still eligible for a credit of up to $2,000 per child this year.

To claim it, they will have to file the taxes for 2022 once the IRS begins accepting returns, which typically occurs in late January. Tax returns that are filed electronically typically see refunds processed within 21 days. So families who owe child tax credit money this year could potentially be paid by February if they act quickly.

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