Stimulus Update: IRS Offers New Guidance on Claiming Thousands in Stimulus Payments in 2022

Could this guidance help you get your hands on more stimulus money?

In 2021, the American Rescue Plan Act provided thousands of dollars in coronavirus stimulus money for households across America. Some people are still entitled to receive part or all of that money this year. However, if you didn't get your payments already, it will no longer happen automatically.

The IRS has recently issued some new guidance for those who are owed stimulus money in 2022. The information the agency provides could potentially help you get thousands of dollars in cash this year that can help you to cope with ongoing COVID-related expenditures.

Here's what the new IRS guidance says

The new IRS guidance, updated March 8, 2022, relates to one particular type of stimulus relief authorized by the American Rescue Plan Act. That's the expanded Child Tax Credit. This tax credit offers $3,600 per child under age 6 and $3,000 per older child.

The IRS guidance relates to the definition of who a qualifying child is for purposes of claiming the credit. According to the IRS, it can be claimed:

• If the child hadn't turned 18 by Jan. 1, 2022
• If the child is the taxpayer's son, daughter, stepchild, eligible foster child, brother, sister, step-brother or sister, half-brother or sister, or any descendent.
• If the child didn't provide more than half their own support in 2021.
• If the child lived with the taxpayer for more than half of 2021 (or fell within an exception to this rule)
• If the taxpayer claims the child as a dependent
• If the child didn't file a tax return jointly with their own spouse in 2021, or did so only to claim a tax refund
• If the child was a U.S. citizen, national, or resident alien

The IRS also updated guidance on March 8 related to the amount of the expanded Child Tax Credit. As the IRS explained, the Child Tax Credit existed before the American Rescue Plan Act but provided a maximum of $2,000 per child. It now provides more, as mentioned above -- either $3,600 or $3,000 depending on the child's age.

The tax code prior to the American Rescue Plan Act also provided a $500 nonrefundable credit for dependents who aren't qualifying children and the IRS has made clear this remains unchanged.

Why is this IRS guidance important?

Many parents received half of the expanded Child Tax Credit last year, as the American Rescue Plan Act authorized payments toward the larger credit to be made monthly. Parents received either $250 or $300 per month per eligible child deposited into their bank accounts or sent via check from July to December.

But, this means half the credit hasn't been claimed for all parents. And some parents -- including those who hadn't recently submitted a tax return or who added new dependents -- didn't receive any of the expanded credit at all.

For anyone missing part of their credit, it will have to be claimed in 2022 by filing a 2021 tax return. The new guidance provided by the IRS is intended to help eligible parents understand their rights and obligations in claiming the remaining credit balance when filing so they can get the full amount of stimulus money they deserve.