Democrats’ expansion of the Child Tax Credit may have expired, but it’s not gone completely. More than 40 million Americans now must contend with it on their annual tax returns, and it’s proving a curveball for many, Politico reported. People who received the monthly Child Tax Credit checks lawmakers created last year may be surprised to see those payments are now reducing or even eliminating their tax refunds. Some divorced people could be upset to learn they weren’t actually eligible for checks they received and now have to pay the money back. At the same time, some will see fatter refunds, particularly the several million who opted out of the monthly payments. So too will people who’ve had babies in the past year. And thanks to a loophole in the law, it’s possible for some to claim bigger child credits than lawmakers intended. The effects on refunds could be a touchy issue for Democrats, potentially putting them on the defensive over one of the biggest achievements of the Biden administration. People love refunds, relying on them as an important part of their budgets, and notice if their payments are smaller than expected or if they suddenly owe the IRS. Some interpret the size of their refunds as an indication of how well they’re faring under the tax system, even though the payments are really just the difference between what is owed and what was withheld from their paychecks. Most people received tax cuts under legislation Democrats approved last year in response to the coronavirus outbreak. The situation for Democrats is reminiscent of the position Republicans were in during the first filing season after their 2017 tax overhaul, when they came under fire because the size of refunds initially dropped before later rebounding to roughly historic levels.
