Optima Tax Relief Reviews Possible Expansion of Child Tax Credit
Taxpayers have been anticipating smaller refunds for tax year 2022 as the Child Tax Credit expansion expired in 2021. Optima Tax Relief reviews discussion of the possible expansion of the CTC for 2022.
The 2021 Child Tax Credit generously provided $3,600 per child aged 5 and under, and $3,000 per child aged 6 through 17. Previously, the CTC provided a maximum of $2,000 for qualifying children. Now that there are outgoing politicians, there are talks of renewing the expanded child tax credit before newly elected officials step into Congress. Supporters of the expansion refer to a U.S. Joint Economic Committee report that showed evidence of a record-breaking decline in poverty due to the CTC in 2021. It also resulted in a notable decline in food insufficiency. Some of these results have already reversed since the credit was reverted back to its previous amount.
Democrats in Congress have hopes of passing another enhanced version of the CTC that could also include corporate tax breaks. Many have promised to oppose any corporate tax breaks if the CTC is not expanded again. While both Democrats and Republicans have shown interest in revisiting the CTC, they’re not all in agreement when it comes to the terms. There will likely be much discussion about the income phase-ins. Some may want to impose income requirements to ensure taxpayers are working.
Congress is attempting to have this discussion before the year ends but with so many other topics to discuss, it may need to wait for 2023. In any case, the Child Tax Credit will remain a higher priority as the current $2,000 per child credit will expire in 2025 with the Tax Cuts and Jobs Act (TCJA). Before the TCJA, the federal child tax credit was $1,000 per child. As of December 20, 2022, Congress did not include an expanded CTC in their 1.7 trillion funding bill.