Immediately after taking office in January 2021, Democrat President Joe Biden signed into law the $1.9T American Rescue Plan Act. One of the biggest and perhaps the most innovative parts of the plan was the expansion of the Child Tax Credit stimulus check. For the 2021 tax year, that aid package upped the child tax credit payments from $2,000 to $3,000 per dependent aged six to seventeen and from $2,000 to $3,600 for children aged five or younger. But the payment lasted only for the first year.
The expanded CTC stimulus check was innovative not only in the increase in the amount. For the first time, parents did not have to wait until tax filing season, in this case, 2022. Congress instructed the IRS to send up to half the amount that each family was entitled to in the form of a monthly tax advance stimulus check.
Further, families did not have to be taxpayers to avail themselves of the child tax credit. For the first time, parents were eligible for the Child Tax Credit payment even if they had not filed income tax recently.
The administration collaborated with a non-profit, Code For America, to create a non-filer sign-up tool. It was bilingual, available in English and Spanish, and was user-friendly, and could be used on a mobile phone.
The payments given to parents were not counted as income for any family. So signing up for the expanded Child Tax Credit stimulus checks did not affect the beneficiaries’ eligibility for other federal benefits such as WIC and SNAP.
Parents that had at least one qualifying child and earned less than $24,8000 as a married couple filing jointly, $18,650 as a Head of Household, and $12,400 as an individual income tax filer could avail themselves of this sign-up tool, Code for American, to get the Child Tax Credit payments. The tool could also be used to receive a missing status check, even for families without children.
President Biden and Congressional Democrats’ attempts to make the Child Tax Credit expansion permanent, or at least through 2025, as part of the Build Back Better package failed as the provision faced stiff opposition from the Hosue and Senate Republicans.
Even two Democratic Party Senators, Joe Manchin, and Kyrsten Sinema opposed the move. Their dissent in a Senate split right down the middle ensuring that the Vice President was forced to step in, but the package failed in the House.
Increase In Age Of Children Eligible For Child Tax Credit Doesn’t Apply For 2022 Tax Year
The American Rescue Plan Act signed by President Biden temporarily increases the eligible age for the CTC payment from sixteen to seventeen for 2021. But with the Child Tax Credit payments reverting to the older version, the rule doesn’t apply for the 2022 income tax year.
This indicates that parents will not be able to claim the Child Tax Credit for children who are between sixteen and seventeen because the qualifying age for the 2022 tax year is back to sixteen and under.
From the 2021 income tax year, the Child Tax Credit rules underwent a drastic change under the Rescue Plan. But despite President Biden’s best efforts to push it through 2025, the expanded version of which was only a one-year scheme. CTC payments reverted to the older version of a fixed amount for parents of #2,000 per month.
So as things stand now in the present version of the Child Tax Credit payments, the child has to be under seventeen for the 2022 season. The child you are claiming must be a biological child, stepchild, sibling, foster child, or a descendant of any of these people, including a niece, nephew, or grandkid.
The child must also be dependent and must have lived with the claimant for at least half the year with some exceptions to the rules.
Vermont Child Tax Credit Payments
Vermont state Child ax Credit continues and sends out $1,000 for every child aged five and under to householders with an AGI of $125,000 or less.
With federal stimulus spending supporting the economy and boosting tax receipts of American states, the legislature and the governor agreed on cutting taxes. It was months before the Democrat legislature and the Republican governor finally agreed on the last day of the legislative session.
The initial proposal by the House was for $50M which would be entirely dedicated to the CTC payments. The final version of H.510 was for $40M, of which $32M went towards the Child Tax Credit benefitting over 30,000 children. The sunset provision has also been removed from the payments.
Payments claiming the CTC payments would lose $20 for every $1,000 over the threshold of their income. The payments helped a broader cross-section of filers including low-income households, working families, students, and seniors on a fixed income.
Gov. Scott said that tax relief payments had always been a priority for him. But he had instead to resort to prevent efforts to jack up taxes for the past 6 years. He said he encouraged the Legislature to agree with him that residents of Vermont deserved a break.
His proposals will help a broad cross-section of taxpayers, including working families, seniors, and low-income households. The bill that was signed will also include income tax relief for caregivers, student loan payers, low-income workers, retirees, and also those receiving military pensions, though the extent of the support has been pared down from the initial amount proposed by Gov. Scott.
The governor in particular sought a total exemption on military retirement payments from state taxes. Ultimately lawmakers agreed on the exemption for just $10,000 in military persons and subject to a threshold of $50K for individuals and $65K for married couples filing jointly.
The tax package was termed historic and was considered a huge win for residents. The Governor promised to continue to work to ensure that communities in Vermont recovered from the pandemic and would come out stronger economically than ever before.
