What to know about $3,600 Child Tax credit: dates, eligibility, amount
The American Rescue Plan made the Child Tax Credit available to more Americans and increased the amount, some of which will be sent as direct payments.
What might be one of the most consequential features of President Joe Biden’s $1.9 trillion covid-19 relief bill enacted in March could be the changes to the Child Tax Credit. The changes are currently only applicable to the 2021 fiscal year but Democrats are looking to make the revamped provision permanent later this year.
The enhanced Child Tax Credit will no longer require households to earn at least $2,500 to begin to see the benefits from the credit. This will mean that families who have no income will be able to take advantage of the tax provision. This could see US child poverty nearly halved and bring some financial stability to many families raising children through periodic direct payments similar to how the stimulus checks were sent to eligible households.
Who is eligible for the enhanced Child Tax Credit?
With the new changes for the 2021 fiscal year all families who have Social Security Numbers and are under the income eligibility threshold, regardless of whether they have income, will have access to the federal checks and the remainder of refundable credit when they file their income tax returns in 2022. This will allow those on unemployment to access the credit as well.
Under the new legislation, individuals will qualify for the enhanced Child Tax Credit if their annual earnings are below $75,000; or a joint income of up to $150,000 for married couples. If your earnings are above those limits, you will receive a reduced credit which gradually phases out and end for individuals earning $95,000 and married couples earning $170,000 filing jointly.
How much is the Child Tax Credit?
The new system provides a refundable tax credit of $3,000 for children aged from 6-17 and $3,600 for children who are under the age of six for the 2021 fiscal year. Families could receive a payment of $300 per child under 6 and/or $250 per child under 18 per month. The legislation envisioned the payments starting in July and running through December covering half the credit. The remainder, $1,800/$1,500 per child, would be available to families as a rebate when they file their 2021 income-tax filing in 2022.
When will there be advance payments on the Child Tax Credit?
The American Rescue Plan called for advanced payments on the Child Tax Credit to start going out monthly starting in July. However, meeting that deadline to begin payments or even send them out monthly might be too tall an order for the IRS to meet. IRS Commissioner Charles Rettig told Congress that the agency might not have the resources needed to set up the online portal for the tax provision as the technicians won’t be available until the IRS has finished with the stimulus checks.
The IRS has currently sent out over 156 million direct stimulus payments, but the tax season has been extended until 17 May. As the agency processes 2020 tax returns it is sending out “plus-up” payments for taxpayers who become newly eligible for payments or a larger payment based on the difference between their 2019 and 2020 tax return.
How to claim the enhanced Child Tax Credit
The agency has advised against filing an amended return if taxpayers have already filed. The IRS commissioner has said that payments will be automatic for those who file their 2020 tax returns by the extended 17 May deadline. Those that don’t normally file tax returns, known as “Non-Filers”, will have to file a tax return to inform the agency of how many qualifying dependents are in the household. The IRS has stressed that filing this year will be important to take advantage of new tax provisions included in the American Rescue Plan Act.
The IRS has been tasked with setting up an online portal where taxpayers will be able to adjust their eligibility for the credit as their circumstances change either due to economic circumstances or additions to a household during the year. The IRS will make additional information about the expanded child tax credit available "as soon as possible."
Te recomendamos en English
- EMMY AWARDS What's the difference between an Emmy and an Oscar award?
- US NEWS Body found in Wyoming fits the description of missing 22-year-old Gabby Petito
- NFL Cleveland Browns safety Ronnie Harrison Jr. fined for a push
- NFL Kansas City Chiefs 35 vs Baltimore Ravens 36 summary: score, stats, and highlights | Week 2
- NFL The New Orleans Saints slump to defeat against Carolina Panthers
- NFL NY Jets QB Zach Wilson throws 4 interceptions in loss to Patriots