The Child Tax Credit Changed in 2021, Then Went Back Down in 2022

The Child Tax Credit was temporarily increased during 2021. For that year only, the credit rose to $3,600 per child under age 6 and $3,000 per child ages 6 to 17, up from the usual $2,000 per child. The increase was part of the American Rescue Plan, a federal relief package passed in March 2021.

Starting in 2022, the credit returned to $2,000 per child, where it remains. This means your tax return for 2022 and beyond shows the lower amount unless Congress passes new legislation to raise it again.

The 2021 increase also changed how and when you received the money. Instead of waiting until you filed your tax return, the IRS sent advance payments directly to your bank account or by mail from July through December 2021. In 2022 and later years, you claim the full credit on your tax return when you file.

Key Takeaways

  • The Child Tax Credit was $3,600 per child under 6 and $3,000 per child ages 6 to 17 in 2021 only; it returned to $2,000 per child starting in 2022.
  • In 2021, the IRS sent monthly advance payments from July through December; in 2022 and later, you claim the full credit on your tax return.
  • To receive the credit, you must have earned income, a valid Social Security number for each child, and claim them as dependents on your return.
  • If you received advance payments in 2021 that were too high based on your actual income, you may owe money back when you file your 2021 tax return.
  • The credit phases out at higher income levels: $400,000 for married couples filing jointly, $200,000 for single filers.

How the 2021 Increase Worked and Why It Ended

Congress included the temporary increase in the American Rescue Plan to help families during the pandemic. The law made two major changes: it raised the dollar amount per child and it allowed the IRS to send half the money in advance payments rather than waiting for tax season.

The advance payments ran from July 2021 through December 2021. Families with children received monthly deposits or checks. The remaining half of the credit was claimed on the 2021 tax return filed in early 2022. This structure was designed to put money in families' hands quickly during a period of economic hardship.

The increase was written as temporary from the start. Congress did not extend it, so the credit reverted to $2,000 per child for 2022 and all years after. There is no automatic mechanism to bring it back; any future increase would require new legislation.

Income Limits and Who Could Claim the Credit

The Child Tax Credit is not available to all families—it phases out at higher incomes. For 2021 and 2022, the credit begins to reduce if your modified adjusted gross income exceeds $400,000 for married couples filing jointly or $200,000 for single filers and heads of household. For each $1,000 (or fraction of $1,000) over the threshold, the credit decreases by $50.

You must also meet other conditions to claim the credit. Each child must have a valid Social Security number, be under age 17 at the end of the tax year, be your son or daughter (including adopted children, stepchildren, and foster children in some cases), and live with you for more than half the year. You must also have earned income during the year.

If your income is very low, you may still receive the credit even if you owe no federal income tax. The credit is partially refundable, meaning the IRS can send you money beyond what you owe.

What Happened If You Received Too Much in Advance Payments

The 2021 advance payments were based on your 2020 tax return or, in some cases, your 2019 return. If your 2021 income was lower than what the IRS expected, you may have received more in advance payments than you were may have access to to claim. When you filed your 2021 tax return in 2022, you had to reconcile the difference.

Reconciliation means comparing what you received in advance to what you actually may have access to for based on your 2021 income. If you received too much, the IRS reduced your refund or asked you to pay back the overage. If you received too little, you claimed the remaining amount on your return and received it as part of your refund.

The IRS sent notices to people who owed money back, but the reconciliation happened automatically when you filed. If you were concerned about owing money, you could have used the IRS's online tool in late 2021 to update your income information and reduce future advance payments.

The Difference Between 2021 and 2022 Tax Years

The way you claim the credit changed significantly between these two years. In 2021, you received half the money in advance payments and claimed the other half on your return. In 2022 and beyond, there are no advance payments—you claim the entire $2,000 per child credit on your tax return when you file.

This means you do not receive any Child Tax Credit money until you file your return and the IRS processes it. Depending on how you file and whether you owe other taxes, this can take several weeks to several months. If you were used to the monthly payments in 2021, the 2022 system feels like a step backward in terms of timing.

The income limits and other rules for who can claim the credit remain the same. The only changes are the dollar amount per child and the timing of payment.

Proposals to Increase the Credit Again

Since the 2021 increase expired, various lawmakers have introduced bills to raise the credit again or make the 2021 amounts permanent. However, no new increase has become law. Any change would require Congress to pass and the President to sign new legislation.

Some proposals would restore the $3,600 and $3,000 amounts. Others would go higher or add new features, such as monthly advance payments again. The status of these proposals changes with each Congress, so there is no set timeline for whether or when a new increase might happen.

If you want to know whether a new increase has passed, check the IRS website or a current tax guide closer to tax season. News coverage of major tax law changes is also reliable, since changes to the Child Tax Credit are significant enough to be reported widely.

How to Claim the Credit on Your 2024 Return

To claim the Child Tax Credit for 2024, you will fill out Schedule 8812 (Credits for may have access to Children and Other Dependents) and attach it to your Form 1040. You list each may have access to child's name, Social Security number, and relationship to you. The IRS uses this information to verify the child and calculate your credit.

If you use tax software or work with a tax preparer, they will ask you about your children and dependents, and the software or preparer will complete the form for you. You do not need to do the math yourself.

Make sure you have each child's Social Security number before you file. If a child does not have a number, you cannot claim the credit for that child. You can explore for a Social Security number at your local Social Security office or online at ssa.gov.

Frequently Asked Questions

Will the Child Tax Credit go back up to $3,600?

Not unless Congress passes new legislation. The temporary increase to $3,600 per child under 6 and $3,000 per child ages 6 to 17 expired after 2021. The credit is currently $2,000 per child for 2022 and beyond. Various proposals exist to raise it again, but none have become law.

Do I have to pay back the advance payments I got in 2021?

Only if you received more than you were may have access to to based on your 2021 income. When you filed your 2021 tax return, the IRS compared what you received to what you may have access to for and adjusted your refund or bill accordingly. If you already filed your 2021 return, this reconciliation is complete.

Can I get the Child Tax Credit if I did not work?

No. You must have earned income during the year to claim the credit. Earned income includes wages, salary, self-employment income, and some other types of work-related pay. Income from investments, unemployment benefits, or Social Security does not count.

What if my child was born in December—can I claim the credit?

Yes, if the child was born by December 31 of the tax year. The IRS counts the child as a dependent for the entire year if they were born that year, even if they were only alive for a few days. You will need the child's Social Security number to claim the credit.

Does the credit reduce my tax bill or do I get money back?

It does both. The credit first reduces the federal income tax you owe. If the credit is larger than your tax bill, the IRS sends you the extra amount as a refund. This is called a refundable credit. The Child Tax Credit is partially refundable, so even families who owe little or no tax may receive a payment.