(CBS Baltimore) – The updated child tax credit will begin in about two weeks. On July 15, the Internal Revenue Service (IRS) will pay millions of parents up to $ 300 per kid. The monthly payments will be extended by the end of 2021 and, in total, may add up to more than any previous stimulus check. The credit could continue beyond this year, if the proposed American Family Plan passes into its current form. But who qualifies for the payments, and how can one make sure the money arrives?
Who qualifies for a monthly payment?
For parents of children up to the age of five, the IRS will pay $ 3,600 per child, half as much as six monthly payments and half as a 2021 tax credit. That changes to a total of $ 3,000 per child between the ages of six and 17. make a one-time payment of $ 500 for dependents aged 18 or full-time college students up to age 24.
Payments will be based on adjusted adjusted gross income (AGI) reflected on a parent or a 2020 parent tax return. (AGI is the sum of an individual’s earnings, interest, dividends, alimony, retirement distribution and other sources of income less certain deductions, such as student loan interest, alimony payments and retirement contributions.) phase out at a rate of $ 50 per $ 1,000 of annual income in excess of $ 75,000 for an individual and beyond $ 150,000 for a married couple. The benefit will be fully refundable, meaning it will not depend on the recipient’s current tax burden. Eligible families will receive the full amount, regardless of what they owe in taxes. There is no limit to the number of dependents that can be claimed.
Child Tax Credit Expansion:
⬆️ Increase the amount of credit
✅ Make the loan fully repayable
↔️ Divide a portion of the payment into monthly installments instead of just a lump sum each year
✅Helps halve child poverty
💯Invest in the well-being of our children https://t.co/VP2KKusvIX
– Treasury Department (@USTreasury) May 17, 2021
As an example, suppose a married couple has a four-year-old child and an eight-year-old child and have shown a joint annual income of $ 120,000 on their 2020 taxes. The IRS would send them a monthly check for $ 550 starting in July. This is $ 300 per month ($ 3,600 / 12) for the youngest child and $ 250 per month ($ 3,000 / 12) for the oldest child. These checks would last until December. The couple would receive the $ 3,300 balance – $ 1,800 ($ 300 X 6) for the youngest child and $ 1,500 ($ 250 X 6) for the older child – as part of their 2021 tax refund.
Parents of a child aged from an age bracket will be paid the least amount. This means that if a five-year-old turns six in 2021, the parents will receive a total credit of $ 3,000 for the year, not $ 3,600. Similarly, if a 17-year-old becomes 18 in 2021, parents will receive $ 500, not $ 3,000.
An increase in income in 2021 to an amount above the $ 75,000 ($ 150,000) threshold could lower the tax credit for a child’s home. The IRS has confirmed that they will soon allow claimants to adjust their income and guardian information online, thus lowering their payments. Failure to do so may increase your tax bill or decrease your tax refund once 2021 taxes are filed.
Eligibility requires the dependent to be part of the household for at least half of the year and to be at least half supported by the taxpayer. A taxpayer who makes above $ 95,000 ($ 170,000) – where the phase income limits are eliminated – will not qualified for the credit to expand. But they can still claim the existing $ 2,000 credit per child.
Eligible families received a qualifying letter in the first half of June. It reads, in part, “If you qualify for CTC payments in advance and want to receive those payments, you don’t need to take any action. You will receive a letter with more details.”
The second letter estimates the amount pending.
Families are eligible to receive monthly #ChildTaxCredit payment will receive a second personalized letter with an estimate of monthly payments, beginning July 15. Learn more from #IRS in: https://t.co/AsJCmx1Xnc pic.twitter.com/Zdoz5F8VA3
– IRSnews (@IRSnews) June 16, 2021
How To Ensure You Receive A Monthly Payment
If a parent has filed taxes for 2019 and / or 2020 and meets the above qualifications, nothing more needs to be done. The IRS has the necessary information. They will automatically start issuing payments in the near future.
If a parent is uncertain that they are eligible, they can check recently launched Child Tax Credit Eligibility Assistant. The tool will walk a taxpayer through a series of questions to determine if they meet the basic requirements. It is necessary to have a tax return handy, except for some basic income information and eligible children.
Many eligible parents do not file taxes. For this reason, the IRS was also set up Incomplete Child Tax Credit Registration Tool. The portal allows parents who do not typically file taxes to provide basic information about themselves. This information includes their name, address, email address, date of birth, and social security number. The IRS will then use the information provided to verify eligibility and automatically begin providing monthly payments.
The IRS recently launched Child Tax Credit Update Portal as well. This tool allows a potential recipient to check their eligibility, see if they qualify for advance payments, and cancel the monthly payment register. Canceling registration of monthly payments means the taxpayer will receive all the credit when they file their 2021 taxes.
First published Thursday, June 24, 2021 at 6:21 pm ET.