MILLIONS of Americans will start getting child tax credit payments this summer under President Joe Biden’s American Rescue Plan.
The purpose of the bill – which was signed by Biden in March – is to help families get by and to bring the US economy back to health after Covid.
How much is the 2021 child tax credit?
Most taxpayers have previously been able to reduce their federal income tax bill by up to $2,000 per child.
However, under the new law, families can get an increased tax break of $3,000 for every child aged six to 17 for the 2021 tax year only.
While you can get $3,600 for every child under the age of six.
Additionally, those with dependents between the ages of 18 and 24 who are enrolled in college full-time can receive $500 for each.
Who’s eligible for child tax credit?
MOST families are eligible for CTC, as long as the children are either a US citizen, US national, or a so-called US resident alien.
The children must also have lived with the person who’s claiming for more than half of the tax year and be claimed as a dependent on the tax return.
This can be a son, daughter, stepchild, foster child, brother, sister, stepbrother or stepsister, but may also be a grandchild, niece or nephew.
You can check if you’re eligible for the credit by using an IRS online tool.
To use it, you’ll need to know your filing status, whether you can claim the person as a dependent and the person’s date of birth.
Every household with children that qualified for the latest $1,400 stimulus check is set to receive the child credit cash.
The maximum credit is available to taxpayers with a modified adjusted gross income (AGI) of:
- $75,000 or less for singles,
- $112,500 or less for heads of household and
- $150,000 or less for married couples filing a joint return and qualified widows and widowers.
If you earn more than this, the extra amount above the original $2,000 credit — either $1,000 or $1,600 per child — is reduced by $50 for every $1,000 in modified AGI.
Combined with the $1,400 checks and other items, the legislation is set reduce the number of children living in poverty by more than half, according to the Center on Poverty and Social Policy at Columbia University.
When will I get 2021 child tax credit?
The cash is automatically set up to be issued monthly from July until December and the second half will then land in bank accounts next year.
The monthly checks of $250 to $300 will start from July 15, unless you opt out.
If you do opt out, keep in mind you’ll then only receive the lump sum in 2022 after the IRS processes your 2021 tax return.
The full payment will arrive with your tax refund, or it could be used to offset any taxes you owe.
An online portal will be set up in July so taxpayers can get the credit when they file their income taxes and opt out of advance payments.
As of now, the credit is set to expire in 2022.
However, as part of his joint address to Congress in April, President Biden spoke about plans to expand $3,600 child tax credits until 2025.
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We explain what parents who share joint custody of kids need to know about child tax credit payments.
Plus, we round up eight ways to get help with childcare costs.
Meanwhile, there are some who might still be owed plus-up payments.