Tax policy updates

Guide for Parents — Everything You Need to Know About the 2022 Child Tax Credit

Breaking down the updates and changes to Child Tax Credit for 2022.

Last updated:

December 1, 2022

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We get it. That first payment should have come out July 15th and maybe you are still waiting. We are doing our best to break it down for you so you know what you need to do to make sure you get the money for your family.

Want to receive text updates on the Child Tax Credit or to get ready for this tax season so you make sure you get ALL the credits you are eligible for? Text GETSET to 844–921–5747 to learn more or click here to send us a text to sign up.

Q: What is this credit?

The Child Tax Credit has been around for awhile, but it has a new look this year. It is a 2021 tax credit, which means you normally would have received it as part of your tax refund (the one you’d get next year in spring 2022). However, the American Rescue Plan made a few key changes to help more families get more money and get it sooner. These changes are temporary and are only for this year.

What changed?

The credit got bigger and was expanded to $3,600 max per child. You can get half of the credit early in 2021 via monthly payments starting July 15th. Most importantly, unlike the old version of the credit, this credit is “fully refundable” which means that you get all of it even if you don’t owe taxes or have earned income. This means there is no minimum income threshold for parents to get it.

Q: Am I eligible to claim it?

Most parents are eligible. Because this credit is for the 2021 tax year, when determining whether YOU are eligible, you want to think about your situation for 2021 and what you expect your situation to be on December 31, 2021.

For example, if you had a new baby in fall 2021, you would be eligible to get advanced payments for that child. (Remember that babies just need to have lived with you for more than half of the time since being born to be a qualified child. Sometimes we see moms trip up because they think the baby has to have lived with them for 6 months!)

Agan, most parents are eligible! But, it’s good to understand which parent should be getting this credit for the child. The three criteria are 1) having taxpayer identification (a SSN or an ITIN), 2) having income below certain amount (most families qualify and you can get the max credit with $0 income), and 3) having a qualifying child. For your child to be considered a “qualifying child” they have to meet the following five criteria:

  1. Relationship: The child must be your child, grandchild, stepchild or adopted child; younger sibling, step-sibling, half-sibling, or their descendent; or a foster child placed with you by a government agency.
  2. Age: The child must be 17 or under by December 31, 2021.
  3. Residency: The child must live with you in the U.S. for more than half the year cumulatively. Remember that newborns count, and only have to have lived with you for more than half the time since they were born.
  4. SSN: Children claimed must have a valid social security number (SSN).
  5. Dependency: The child must be considered a dependent for tax filing purposes. (You can use this tool from the IRS to figure out if they are.)

Note: If you are separated or divorced, you and your former spouse can’t split the different tax credits for the same child. If you claim a dependent for the CTC, you will also have to claim that dependent for the Earned Income Tax Credit, if you are eligible.

Q: What do I need to do to get it?

Great question. That’s the one we hear the most. Most folks don’t have to do anything and the payments will be automatic.

NEW PARENTS — Did you have a new child in 2021? (If not, skip ahead.)

New parents, we see you! You are likely eligible for advanced child tax credit payments, but you can’t yet receive them because the IRS is still building a feature in the Child Tax Credit Update Portal that you’ll need.Basically, the IRS doesn’t yet know about your new baby, so you have to “tell them” by using a feature in that portal. Originally it was supposed to come out in late summer and now has been pushed to fall. We know it’s frustrating! (*One quick note — If you were claimed as a dependent in 2020 then you can’t get the advanced payments, but can get the full amount if in your tax refund if you are the person claiming your child for 2021.)

Remember, even if the feature is never released this year, you WILL be able to get the FULL amount of your Child Tax Credit ($3,600) when you file your taxes this year.

PARENTS — Were all of your children born in 2020 or before?

Whether you need to take action or not depends on your situation. Read more about the three main groups of folks below.

  1. Filed Taxes in 2019 or 2020, and have same family situation: I filed my 2020 taxes which included all of the kids I would be eligible to get the credit for and don’t have any big changes to my family, income, or marital status. If that’s you and you haven’t had any changes that would affect your eligibility (like a new child born in 2021 or a drastic increase in income), you are good to go! You are one of the 88% of families who will receive these payments automatically.
  2. Filed Taxes in 2019 or 2020, and have some changes and different family situation: The IRS created a Child Tax Credit Update Portal for tax-filers to update their information with the IRS to get the correct amount of their credits as quickly and safely as possible. Want to update your bank account information? Did your filing status for 2021 change? Have a change in qualifying children? Have a new address in 2021? Don’t want to receive the credit via monthly payments? This portal is live but doesn’t yet let you update info about a new baby, a feature the IRS says will be revealed in FALL 2021. If you want to use this portal we recommend using this guide (with pictures and step-by-step instructions) to set up an account so you can manage your advanced payments. You can also stay updated on when the feature goes live and get other updates about tax-time credits here: letsgetset.link/text
  3. Haven’t filed taxes in 2019 or 2020: Haven’t filed your 2019 or 2020 tax returns or used prior IRS portals to get stimulus checks? You need to take action to opt into the advanced payments AND you could possibly be able to get even more money from 2020. Head over to https://www.getctc.org/letsgetset to submit a simple 2020 form to the IRS so they have your info in their system. This will trigger the advanced child tax credit payments. If you have questions, just text us! (If you are in this group you may actually be owed money by the IRS. There are billions of dollars in refund money left with the IRS each year because people don’t file.)

Q: When will I start receiving it?

The IRS shared the full schedule here, but Child Tax Credit payments will go out on July 15, August 13, September 15, October 15, November 15 and December 15.

Q: How can I stay informed as the portals are live and the IRS issues updates?

At Let’s Get Set we are on a mission to help new parents secure all the tax credits they are eligible for. We are especially focused on hardworking families making less than $40k a year because we know that the least info and tools are out there to help get their questions answered.

Want to stay informed as the IRS issues new guidelines or the portals go live? Click here to send us a text and get set up to receive regular text updates about the credit.

You can also monitor the IRS website for the advanced Child Tax Credit here: https://www.irs.gov/credits-deductions/advance-child-tax-credit-payments-in-2021

Check out our Q+As below (updated regularly):

Q: Can I sign up for the Child Tax Credit yet if I had a baby in 2021?

You ARE eligible for the advanced payments, but you can’t sign up just yet. For folks who’ve filed taxes before the IRS has shared that they are hoping to have the feature built out that lets you tell them you had a child in 2021 by FALL 2021. If you want to get a head start you can go ahead and create an account under the Child Tax Credit Update Portal by clicking “Manage Advance Payments”.

Q: Will I have to pay this money back?

If you receive payments for a child who is no longer your dependent or if your income has drastically increased in 2021, you may have to pay that money back when you file taxes next year. However, there are some protections for families making below $40,000.

Q: What about DACA recipients? Are they eligible?

Yes, DACA recipients are eligible for the Child Tax Credit so long as the child claimed has a valid SSN. DACA recipients who are dependents of ITIN filers can also be claimed for the Child Tax Credit because they have valid Social Security Numbers.

Q: What can I do with the payments?

Anything you would like!

If you need help putting some towards savings — either for an emergency fund or for longer term savings, let us help.

What questions do you have? Let us know so we can answer them.

You can text questions to 844–921–5747 or fill out this survey here for a chance to win a giftcard: https://www.surveymonkey.com/r/childtaxcreditsurvey

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