Find out how you can still claim a generous tax credit, even if it will be a little smaller.
COVID-19 relief legislation provided much-needed funds for households across America. The American Rescue Plan Act, in particular, offered $1,400 checks to all eligible adults and dependents and provided parents with even more generous payments worth up to $3,600 for children under the age of 6 or up to $3,000 for those aged 6 to 17.
These payments were for the 2021 tax year, though -- and it's now the end of 2022 and no additional large payments have been authorized on the federal level to be deposited into American's bank accounts this year.
While the $3,600 payments will not be happening, the IRS has indicated in a news release that up to $2,000 could still be on offer to parents who qualify for some extra financial help. Here's why.
The IRS says this credit is smaller, but still an option
In a December news release from the IRS intended to help people get ready for tax season, the IRS indicated many people could get less money this year because of the COVID-19-related tax code changes coming to an end.
Among the changes the IRS discussed, one of the most important was the end of the expanded Child Tax Credit. It was this expanded credit that entitled parents to between $3,000 and $3,600 per eligible child.
With many American parents struggling due to the effects of inflation, the end of this credit is a big blow. But, the good news is, the IRS has made clear that many parents will still be eligible for payments of up to $2,000 for the 2022 tax year.
These $2,000 payments are an option for families because a Child Tax Credit existed before the COVID-19 relief bills. Qualifying parents could claim a credit of up to $2,000 when they filed their tax returns each year -- a total of $1,400 of which is refundable. The American Rescue Plan Act tweaked and changed this existing credit to make it larger, provide some of the money upfront, and make the entire credit refundable.
The end of the expanded credit didn't alter the existing one, though, as the IRS points out -- so a payment of up to $2,000 per child can still be claimed when filing 2022 returns.
Make sure to get your $2,000 from the IRS
If you are eligible for this credit, you must file a tax return to claim it. The IRS will begin accepting returns in late January, so take action to get your money ASAP so you can use it to pad your savings account or cope with the rising costs families have endured this year.
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