   INSIGHTi       The Child Tax Credit in the November 3 Modified Version of the Build Back Better Act: Summary Table  Updated November 4, 2021 On November 3, 2021, the House Rules Committee posted a modified version of the Build Back Better Act (BBBA; H.R. 5376). This modified bill would extend the 2021 expansion of the child credit for one year—2022—and would permanently make the credit fully refundable beginning in 2023. As a result of these changes, many taxpayers in 2022 would continue to receive a monthly benefit of up to $300 per young child (0-5 years old) and up to $250 per older child (6-17 years old). Other aspects of the proposed credit in 2022 are similar to those in effect for 2021. This new legislative text is the third version of the BBBA. On September 27, 2021, the House Budget Committee reported the BBBA (H.R. 5376), which would have effectively extended the 2021 expansion of the child credit through the end of 2025 and permanently made the credit fully refundable. (That proposal’s changes to the child credit are summarized here.) On October 28, 2021, the House Rules Committee posted a modified version of this bill text that reflected the White House’s framework released the same day. The November 3 legislation’s child credit provisions are similar to those in the House Budget Committee reported BBBA (September 27) and virtually identical to those in the October 28 version. Major differences include the following: The 2021 expansion of the child credit (and advance payments) would be extended for one year under the November 3 legislation—2022—as opposed to through the end of 2025 under the House Budget Committee reported bill. (Monthly determination of eligibility and modified administration of the advance payments that was included in the September 27 bill is not included in the November 3 text.) Advance payments of the 2022 credit would generally only be issued to taxpayers with incomes under $150,000 if married filing jointly or income under $112,500 if a head of household filer under the November 3 legislation, as opposed to the House Budget Committee reported bill.  Congressional Research Service https://crsreports.congress.gov IN11786 CRS INSIGHT Prepared for Members and Committees of Congress  Congressional Research Service2     The 2022 child credit parameters would not be indexed for inflation under the November 3 legislation, unlike the House Budget Committee reported bill, which included an indexing provision. The November 3 version includes $3.9633 billion for IRS administration of the credit, and $1 billion to support efforts to increase enrollment among eligible nonfilers (both amounts would be available through September 30, 2026). In the September 27 bill, these amounts were $9 billion and $1 billion, respectively. In contrast, no additional funds were included in the October 28 version. Major changes to the child tax credit made by the November 3 modified legislative text are summarized below in Table 1. However, Table 1 is not a comprehensive accounting of every change included in the November 3 BBBA text, nor does it include specific details for every proposed change. The figures following the table illustrate the annual credit amount by income for different years. Table 1. Selected Parameters of the Child Tax Credit Under the November 3 Modified Version of the Build Back Better Act (H.R. 5376)   Current Law    Parameter 2021a (including changesProposedProposedProposed   made by ARPA)20222023-2025After 2025          Maximum $3,600 per child 0-5 years oldSame as 2021$2,000 per child 0-16$1,000 per child 0-16 Credit     years oldyears old Amount $3,000 per child 6-17 years old not adjusted for inflationnot adjusted for inflation            not adjusted for inflation             Credit $3,600 per child 0-5 years oldSame as 2021$2,000 per child 0-16$1,000 per child 0-16 Amount Low-      years old Income $3,000 per child 6-17 years old    Taxpayers               Can Receive Fully refundableb Fully refundablebFully refundableb          Fully refundable means eligible low-      and moderate-income taxpayers can      receive the “full” or maximum credit      amount, irrespective of their income.             Maximum $300 per young childSame as 2021N/A. No monthlyN/A. No monthly Monthly $250 per older child payment of credit.payment of credit. Amount not adjusted for inflation                   Phaseout Initial Threshold Same as 2021$400,000 MFJ$110,000 MFJ Threshold(s) (Phaseout of Increased Credit) $200,000 HOH$75,000 HOH          MFJ: married $150,000 MFJ $200,000 S$75,000 S filing jointly          $112,500 HOH    HOH: head of        $75,000 S    household               S: single Second Threshold               (Phaseout of Pre-ARPA Credit)      $400,000 MFJ      $200,000 HOH      $200,000 S               Congressional Research Service3       Current Law      Parameter2021a (including changesProposedProposedProposed   made by ARPA)20222023-2025After 2025         IncomeNoYes. Lowest income ofNoNo Lookback for the current year    Phaseout (2022) and preceding       year (2021).            IDWork-authorized SSNAny taxpayer ID (e.g.,Same as 2022Same as 2022c Requirement SSN/ITIN/ATIN)    of Qualifying      Child              IDAny taxpayer ID (e.g., SSN/ITIN)Same as 2021Same as 2021Same as 2021 Requirement      of Taxpayer              Maximum17 years old17 years old16 years old16 years old Qualifying      Child Age              Method ofUp to 50% advanced; remainderUp to 100% advancedNo advance. CreditNo advance. Credit Receiptclaimed on tax return claimed on tax return.claimed on tax return.         RepaymentSafe Harbor Amount:Safe HarborN/AN/A protection forRepayment is limited to casesAmount: Repayment    excesswhere the number of childrenwould be limited to    advanceused to estimate the advancecases where the    paymentsdpayments of the 2021 creditnumber of children      differs from the number ofused to estimate the      children actually claimed on theadvance payments of      2021 return. In these cases, anythe 2022 credit differs      amount the taxpayer wouldfrom the number of      otherwise need to repay ischildren actually      reduced by a safe harbor amount.claimed on the 2022      The maximum safe harbor amountreturn. The maximum      is $2,000 times this difference insafe harbor would be      number of children.$3,600 times this       difference in number       of young children 0-5       years old, plus $3,000       times this difference in       number of older       children 6-17 years       old.      Safe Harbor Phaseout: TheSafe Harbor      safe harbor amount is subject toPhaseout: Same as      phaseout.2021      Applicability of Safe Harbor:Applicability of Safe      There is no repayment protectionHarbor: Same as      for changes in credit amount due2021      to changes in income and marital       status between the reference year       and the applicable return.                       Congressional Research Service4      Current Law    Parameter2021a (including changesProposedProposedProposed  made by ARPA)20222023-2025After 2025       Would OtherYes, ARPA changes for 2021 areYes, proposed changesSame as 2022No. Temporary Temporarylayered on existing temporaryin BBBA for 2022 changes made by P.L. Modification(s)changes made by P.L. 115-97.would be layered on 115-97 are scheduled to the Child existing temporary to expire. Credit Be in changes made by P.L.   Effect? 115-97.          Source: CRS analysis of the November 3 text of the Build Back Better Act. Notes: A child’s age for the purposes of these age limits is based on their age on last day of the year. For the purposes of advancing the credit, the IRS can use existing data to project the child’s age. Income for most taxpayers is their adjusted gross income (AGI). a. The bill also proposes making changes to the credit for 2021 concerning the applicability of the safe harbor, married joint filers, and data used to calculate the advance payments. b. Low-income taxpayers are generally only eligible for the full amount in 2021 if their principal place of abode is in the United States or Puerto Rico. This provision permanently extends that requirement to receive a fully refundable tax credit. c. Prior to the expansion of the child credit under ARPA, the ID requirement for qualifying children was temporarily changed from any taxpayer ID to a work-authorized SSN for 2018-2025. Hence, under current law, absent any changes under BBBA, the taxpayer ID requirement for qualifying children is scheduled to be any taxpayer ID beginning in 2026. d. Excess advance payments are equal to the value of the credit a taxpayer is eligible to claim on their tax return minus amounts received as advance payments.  Congressional Research Service5     Congressional Research Service6     Congressional Research Service7                                                 Author Information Margot L. Crandall-HollickSpecialist in Public Finance        Disclaimer This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress. Information in a CRS Report should not be relied upon for purposes other than public understanding of  Congressional Research Service8     information that has been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the United States Government, are not subject to copyright protection in the United States. Any CRS Report may be reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you wish to copy or otherwise use copyrighted material.                                                              IN11786 · VERSION 7 · UPDATED

CRS Releases Updated Child Tax Credit Analysis

CRS Releases Updated Child Tax Credit Analysis

Congressional Research Service

The latest budget reconciliation plan would allocate nearly $4 billion for IRS administration of the expanded child tax credit and $1 billion to increase enrollment for eligible nonfilers, the Congressional Research Service said in a November 4 updated summary. 

The latest budget reconciliation plan would allocate nearly $4 billion for IRS administration of the expanded child tax credit and $1 billion to increase enrollment for eligible nonfilers, the Congressional Research Service said in a November 4 updated summary.

The latest <a href="/lr/resolve//7ckrc">budget reconciliation plan</a> would allocate nearly $4 billion for IRS administration of the expanded child tax credit and $1 billion to increase enrollment for eligible nonfilers, the Congressional Research Service said in a November 4 updated summary.