Child tax credit means some families get smaller refund this tax season

Posted at 7:45 AM, Mar 18, 2022
and last updated 2022-03-23 11:46:50-04

DENVER — Tax season looks a little different this year for the millions of families who received the expanded monthly child tax credit payments last year.

Families who received child tax credit payments in 2021 are likely getting a smaller refund or may even owe money this filing season.

With prices increasing for everything from gas to groceries to housing, a smaller refund can be a big financial burden.

“There's been a huge increase in requests for shelter and rental assistance for people who are struggling to pay rent,” said Rebel Rodriguez, the Shelter Operations Manager with Family Promise of Greater Denver.

She said the families who received the advanced child tax credit payments are seeing smaller refunds, and that’s making it tough to afford everything else their family needs.

As part of a pandemic relief package, Congress increased how much money parents got for the child tax credit and let them receive that money early.

Congress raised existing credit from $2,000 up to $3,600 per child for ages 5 and younger and $3,000 for each child aged 6-17.

Families were able to collect half of the credit in monthly installments last year with the remainder to be claimed this tax season.

But, some parents received more money than they should have, and will have to pay back the difference.

The advanced payments were meant to help families who couldn’t afford to wait for their tax refund, and it worked.

The payments reduced the number of children living in poverty by 40% and helped three times more families than usual.

Congress had the chance to extend these advanced payments, but they did not, and that stop is already impacting families.

According to the Columbia Center on Poverty and Social Policy, 3.7 million more children were living in poverty in January than in December. That’s a 5% increase in just one month.

For families worried about a smaller refund this year, experts say there are options.

First, check for other tax deductions like credits for childcare expenses or for self-employed workers who pay their own health insurance.

Parents can also contribute to a retirement account before Tax Day to reduce their taxable income—and the taxes they owe.

President Joe Biden encouraged Congress to support an extension of the expanded tax credit, but so far, there’s not enough support.

For now, the credit has reverted back to its original amount of $2,000 with no option to get it early.

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The filing deadline to submit 2021 tax returns or an extension to file and pay tax owed is Monday, April 18, 2022, for most taxpayers. By law, Washington, D.C., holidays impact tax deadlines for everyone in the same way federal holidays do. The due date is April 18, instead of April 15, because of the Emancipation Day holiday in the District of Columbia for everyone except taxpayers who live in Maine or Massachusetts. Taxpayers in Maine or Massachusetts have until April 19, 2022, to file their returns due to the Patriots' Day holiday in those states. Taxpayers requesting an extension will have until Monday, October 17, 2022, to file.