Millions of American families were abruptly cut off from their monthly increased child tax credit payments when the calendar switched to 2022.
These increased credits provided eligible families with up to $3,600 for children under the age of six and up to $3,000 for children aged six to seventeen between July and December. This equated to a monthly stipend of $250 or $300 for each child. By filing their 2021 tax return, these same families can now claim the second half of the benefits.
This may appear to be a good thing on paper, but for many people who have already gotten their tax returns, it has been a major disappointment.
"Democrats' expansion of the child tax credit may have expired but it's not gone completely. More than forty million Americans now must contend with it on their annual tax returns. And it's proving a curveball for many," Politico writes.
"People who received the monthly child tax credit checks lawmakers created last year may be surprised to see those payments are now reducing or even eliminating their tax refunds. Some divorced people could be upset to learn they weren't actually eligible for checks they received and now have to pay the money back," Politico adds.
On the other hand, some taxpayers will receive better refunds, particularly those who did not accept monthly payments or had children last year. Furthermore, a "loophole" in the law has permitted certain taxpayers to claim more money than was intended by the law.
Many people appear to have already received larger refunds. According to the most recent Internal Revenue Service figures, the agency has already issued roughly 38 million tax refunds totaling about $130 billion. When broken down, that amounts to an average refund of $3,401 per person. Notably, this is $411, or nearly 14%, more than the previous tax season.
MarketWatch cited Elaine Maag, a senior fellow at the Urban-Brookings Tax Policy Center in Washington, D.C., as a source for the greater refunds this year, citing the more generous child and dependent care credit, the expanded child tax credit, and the earned income tax credit.
The discontinuation of the enhanced credit program, regardless of the various tax refund amounts, has already had disastrous implications. Maag stated that child poverty has increased by more than 40% in a recent op-ed for CNN Business.
"This effect is being exacerbated by the highest rate of inflation since the early 1980s, putting extra pressure on low-income households who just lost a key source of financial support," she wrote.
