The IRS is yet to confirm the date of releasing the 1st payments but most people have an overall idea regarding the timeline of the child tax credit. Those people who are eligible for this payment are likely to receive it by 2022 through 7 separate payments.
Adult citizens must also fulfill adjusted particular gross income criteria and everybody will not qualify. Those citizens awaiting their stimulus check worth $1,400 must track the status.
What Is This Child Tax Credit?
This relief is essential for parents and other people with dependents. They can claim to decrease the tax bill based on the age and number of dependents living with them. Earlier this tax credit offered $2,000 for each child below 17 years of age. In case of excess credit, families could get additional or refundable credit of almost $1,400.
Qualifications & Income Limits For Child Tax Credit
Payments are going to be released in 2021 till 2022. Every qualifying child between the age of 5 will certainly receive almost $1,800 divided monthly in $300 this year. Children from 6 to 17 will receive approximately $1,500 divided monthly in $250 in 2021 six times. The remaining payment for both age groups will arrive along with tax refunds after claiming the remaining child tax credit of 2022. Qualified dependents from 18 to 24 will receive a $500 one-time payment.
Additionally, single people with over $75,000 income, household heads earning over $112,500 every year, and couples married earning over $150,000 per year will get phases from the amount. The child tax credit will range from $50 to $1,000 earning households.
The renewed credit qualifications have broader eligibility that also includes families with higher income. Although they will be receiving reduced credit. Married couples who will be filing jointly are eligible if they have an income less than $400,000 as adjusted gross. Whereas individuals that have AGI below $200,000 are also qualified to receive the entire amount.
Scheduled Payments For The Citizens
The payments for child tax credit will start arriving in July, but the date is unknown. Speculations are still on as citizens await their returns. The first payment of 2021 will be released in July. The payments will be made monthly while the last one will arrive in December.
Opting Out from Receiving Payment
Instead of receiving monthly payments throughout this year, eligible citizens can opt for receiving the payment in one single installment in 2022. Interested people can opt-out of this monthly payment in the IRS portal that will be opening from 1st July.
Although the IRS may overpay some citizens. In cases of excess payment, the credit is likely to be deducted from the total tax refund.
Age Group For The Recipients
Eligible people for the child tax credit with children aged 19 to 24 must have them enrolled in a college full-time. They are qualified to receive $500.
Newborn babies born in 2021 are qualified to get $3,600. Adopted children also qualify for this payment.
Payment Methods Taken Up
Both the child tax credit and stimulus check will be arriving through the same method. The Americans who received their stimulus check through direct deposit might also receive the tax credit the same way. In cases someone received the benefits of Social Security including the SSDI or SSI might receive their credit payment via the card of Direct Express. People who usually do not pay tax may get it in a different manner. EIP cards and paper checks are few other arrival modes. You can find out about your payment method on the IRS portal.
Parents Sharing Dependent Custody
The first 2 stimulus checks were equally claimed by unmarried parents sharing custody of the dependent. Nonetheless, this is not allowed anymore for the 3rd check.
Overpayment Rules
This child tax credit is more stringent than the rules stimulus check. As a result, if the IRS has overpaid someone, they must pay back the extra amount. In order to avoid any tax inconvenience, citizens can make necessary adjustments from 1st July on the portal.
2020 & 2021 Tax Credit Difference
The major difference in the 2021 version is the monthly payment system. Furthermore, the credit being paid will be deducted from your tax filed next year in 2022. Therefore this simply an advance payment to provide relief to US citizens.
The credit amount has also been increased to $3,000 from $2,000 per child below 6 years and $3,000 to children above 6 years. This credit is completely refundable. The total payment will be split into two-part payments. The earnings floor of $2,500 has been removed. Families living in Puerto Rico are also eligible for this credit.
Deadline
This tax credit is so far a temporary relief for this year only. The changes or extensions for 2022 will have to be made through another separate bill. Although Biden is not keen to extend it beyond 2021, Congress might pass it.
IRS Portal
The IRS informed that the portal for this tax credit will be upgraded with family details for qualifying children. People can also add other relevant details through which it becomes easier and more accessible. The procedure also becomes faster and more transparent.
Biden’s New Relief Proposal
The Act of Rescue Plan for the citizens of the US will now be receiving an increased amount of nearly $3,600 each. This is the 3rd stimulus check that will have additional unemployment benefits along with the stimulus payments which have been awaited for so long. The stimulus money has been received by many but many are yet to get it. Joe Biden, President of the United States of America, is now proposing to extend the child tax credit for the next few years.
This new stimulus package will offer families with $3,600 to eligible ones with children of 5 years. Additionally, children below 17 years are qualified to get $3,000. The entire amount is divided into 2 parts. The first part will be given to the families through tax returns and the remaining half through monthly payments between July and December.
Impact of 2019 & 2020 Tax Returns
The previous year’s tax returns have big chances of having a big impact on this credit payment as well. The IRS has the responsibility of basing the eligibility according to the 2020 return of tax. This can be done only if the tax return has already been processed before the July payment starts. You can calculate your credit payment based on your tax return beforehand as well.
It is also known that the citizens who had filed the tax returns for the year 2020 within 17th May 2021 will receive automatic payments. In addition, 17th May was made the new deadline for tax return filing. On the contrary non-filers also eligible to receive credit despite not filing 2020 returns on tax.
In general, this child tax credit has several advantages. US citizens will greatly benefit from this provision of the federal government in many ways in this difficult time of the pandemic.
