The Child Tax Credit is Making Tax Season Even More Complicated

The Child Tax Credit is Making Tax Season Even More Complicated

The IRS has been plagued by a number of problems since the pandemic started. 


There are signs that we’re headed for a very messy tax season. The IRS has essentially admitted as much, with the agency telling CBS News this week that it is significantly understaffed heading into its busiest time of year. There’s also the controversy over the verification software, which the IRS has admitted it is reconsidering.

On top of that, it’s going to be a tax season unlike any other, with many taxpayers confused about how the huge amount of benefits that went out in 2021 will impact their taxes.


For that reason, the IRS updated its frequently asked questions page for the child tax credit last month.

There was already such a thing as the child tax credit, but the American Rescue Plan Act expanded it and changed how it works, including by adding direct payments. The new IRS document primarily addresses that change.

“The American Rescue Plan expanded the Child Tax Credit for 2021 to get more help to more families,” one of the answers in the document says. “The credit increased from $2,000 per child in 2020 to $3,600 in 2021 for each child under age 6. Similarly, for each child age 6 to 16, it’s increased from $2,000 to $3,000. It also provides the $3,000 credit for 17-year-olds. Under the American Rescue Plan, the IRS disbursed half of the 2021 Child Tax Credit in monthly payments during the second half of 2021.”

The document also deals with the tax implications of the expanded tax credit.

“Generally, the total amount of advance payments for each of your qualifying children equaled 50 percent of the amount of the credit that the IRS estimated you would be eligible to claim on your 2021 tax return for those children,” the site said.

An Uncertain Future

The expanded child tax credit expired at the end of 2021. After the White House and Democratic leaders in Congress spent much of the year trying to extend the credit, the Build Back Better spending package was not passed by the Senate, causing the child tax credit to revert to its pre-2021 status and leading to a stop in the monthly payments.

Whether the previous version of the child tax credit will be revived is likely to be determined by negotiations between the White House and Congress, and any version of the credit that passes will likely need the support of Sen. Joe Manchin (D-WV.) Manchin, however, has been skeptical of such proposals, especially those that lack a work requirement.

Stephen Silver, a technology writer for The National Interest, is a journalist, essayist and film critic, who is also a contributor to The Philadelphia Inquirer, Philly Voice, Philadelphia Weekly, the Jewish Telegraphic Agency, Living Life Fearless, Backstage magazine, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. Follow him on Twitter at @StephenSilver.

Image: Reuters