While Biden’s Build Back Better (BBB) bill has proposed funding that will allow the expanded child credit to be paid in monthly installments in 2022 it has been held up in Congress as Sen. Joe Manchin of West Virginia is refusing to endorse the CTC extension and overall bill without limiting the payment to households with at least one working parent (getting a W2 or 1099).
I will continue to provide updates on the bill and it’s passage, which you can follow via the options below. It is likely it could be scaled back from the proposal below to get Manchin and other detractors on board. Further if it is passed later this year, I would expect the IRS would make retroactive payments for any missed months.
See 2023 updates on the CTC and changes following expiry of pandemic expansions.
Biden-Democrat Proposal to Expand CTC
Under the BBB spending plan the current expanded Child Tax Credit will be extended for another year, bringing the total amount paid over 2 years to a maximum of $7,200. The current expanded CTC is a refundable credit, being partially paid in advance in 2021. The rest is claimed in 2022 via your tax return.
The 2022 CTC extension will work in a similar manner, expected that it can be paid in advance for all of 2022, meaning an ongoing monthly payment for over 35 million American households. See below for the standard/base payment amounts available over the next 2 years.
|Expanded CTC Year||Ages 5 and younger credit||Ages 6 to 17 Payment|
|2022||$1800 + $3600**||$1800 + $3000**|
Note: Those who don’t claim the monthly advanced CTC payments, can claim the full or partial amounts in their subsequent year tax returns if eligible.
Also the amounts noted in the above table are the standard amounts. These could be different based on IRS processing delays and eligibility criteria. You can see more reasons in the CTC Payments and FAQ article.
While the final text of the spending package is still to be passed, it is expected that qualification income thresholds will remain the same as shown below for the current expanded CTC.
Other child related provisions in the Build Back Better plan include:
- Expanded Universal Preschool for all 3- and 4-year olds for six years covering over 6 million children.
- The cost of qualified child care will be limited to 7% of a families household income. This would be for lower income families, i.e. those earning up to 250% of their states median income. It would cover near 20 million parents, who must be working, seeking work, in training or taking care of a serious health issue.