If you have dependent children under the age of 17, there is a good chance that extra cash will come your way soon.
The extended tax credits for children Bank accounts will be charged up to $ 300 per month per child starting July 15th. Credits continue each month through December. The payments are part of the US rescue plan that President Joe Biden signed in March.
Qualified families receive:
- $ 300 per month for each child under the age of 6.
- $ 250 per month for each child 6-17 years old.
The full loan amount is $ 3,600 for children under the age of 6 and $ 3,000 for older children. Typically, the child tax credit is $ 2,000. The American Relief Plan provided additional temporary credit of $ 1,800 for parents of children under the age of 6 and $ 1,000 for parents of children ages 6-17.
The parents receive half of the credit in monthly installments. As with stimulus checks, the payments are a Advance on a tax credit. Parents will get the remaining half of the loan in the next year if they do submit a tax return for 2021.
Who is entitled to the Extra Child Credit?
Single parents earning less than $ 75,000 per year, householders earning $ 112,500, and married couples earning less than $ 150,000 are eligible for Full Extended Loan.
For parents earning above these amounts, the additional $ 1,000 or $ 1,800 will expire 5 cents for every $ 1 of income over the threshold until they disappear completely. (This was the same discontinued formula that was used for the first stimulus test and second stimulus test.)
Parents who are normally eligible for the $ 2,000 child tax credit but are not eligible for the additional tax credit will still be eligible for the $ 2,000 tax credit for the next year at tax time.
Payments are based on 2020 tax returns or 2019 tax returns for individuals who have not yet filed or their Returns were not processed.
For parents with split custody, the parent claiming the child as dependent on their tax return is entitled to the credit. However, the IRS has not provided any information on how it will deal with certain situations, such as: B. when the parents take turns claiming that the child is dependent.
How do I make sure I get the money?
You don’t have to do anything if you’ve already filed your 2020 tax return. As long as you’ve listed your children as dependents and are eligible, you will receive payments – most likely in the same way that you received yours third stimulus check. If your last Stimulus Check has been deposited into your bank account, expect the Child Balance to be deposited directly into the same account unless you updated your bank account details when you returned in 2020.
If you haven’t filed a return for 2020, you should file one even if it’s not required. Using free tax return software Submitting your return online is the best way to ensure you get your money quickly.
Even if you owe child support or other debts that would normally offset your tax refund, you will receive the monthly payments. However, the IRS could still garnish the other half of the loan at tax time.
If your child was born in 2021 (or 2020 if the IRS didn’t process your return by July), you won’t receive automatic payments after July 15th. However, the IRS does offer taxpayers the opportunity to update information about changes in their income, enrollment status, or the number of qualified children. Parents can also opt out of monthly payments if they want to receive all of the credit with their tax refund.
Robin Hartill is a certified financial planner and senior writer at The Penny Hoarder. She writes the Dear Penny personal finance advisory column. Send your tricky money questions to AskPenny@thepennyhoarder.com.
This article originally appeared on www.thepennyhoarder.com