Reading such headlines may lead one to believe only families in or near poverty collect a child tax credit. It may also create the impression that somehow children in a family benefit directly and solely from the tax credits. Do children live in poverty independent of their families? If the credit drops for a family to the extent the family falls into poverty, isn’t the entire family not just children affected?
It’s all political pandering such as below.
The end of the advance child tax payments in December resulted in a tremendous effect on poverty in the US. Analysis from Columbia University suggests that 3.4 million more children lived in poverty in February 2022 compared with December 2021. The number of children living in poverty decreased by 40% when the monthly child tax credit payments were sent out from July to December 2021. The final half of the enhanced tax credit will come to families in their tax refunds this year. Then the credit will revert back to its original, nonrefundable amount of $2,000 per child. President Joe Biden is urging Congress to extend the payments “so no one has to raise a family in poverty.” The White House backed up its argument recently with data showing the state-by-state impact of the child tax credit on American families. The Biden administration claims that the expanded credit would not only help individual families but also support the economy and boost employment.https://www.cnet.com/personal-finance/taxes/bigger-child-tax-credit-could-lift-millions-of-children-out-of-poverty/
Maybe if the benefits of the child tax credit went to those in need and it actually focused on families at or near poverty levels, instead of middle and upper middle class taxpayers, higher amounts would be feasible.
Who qualifies for the child tax credit?
For the 2021 tax year, you can take full advantage of the expanded credit if your modified adjusted gross income is under $75,000 for single filers, $112,500 for heads of household, and $150,000 for those married filing jointly.
The credit begins to phase out above those thresholds.
- First phaseout: Income exceeds the above thresholds but is below $400,000 (married filing jointly) or $200,000 (all other filing statuses). Your total credit per child can be reduced by $50 for each $1,000 (or a fraction thereof). This phaseout will not reduce your credit below $2,000 per child.
- Second phaseout: Income exceeds $400,000 (married filing jointly) or $200,000 (other filing statuses). The phaseout will continue docking $50 per each $1,000 and begin to reduce your credit per child below $2,000. You may be disqualified from the credit altogether.
Some of the other eligibility requirements for the child tax credit include:
- You must have provided at least half of the child’s support during the last year, and the child must have lived with you for at least half the year (there are some exceptions to this rule; the IRS has the details here).
- The child cannot file a joint tax return.
- You must have lived in the U.S. for more than half the year (or, if filing jointly, one spouse must have had a main home in the U.S. for more than half the year).