Child Tax Credit: What Is It?
The Child Tax Credit is one of the most important parts of President Joe Biden’s American Rescue Plan. Eligible families will be able to receive as much as $3,600 per child. This page will continue to be updated with more information as it becomes available. In the meantime, we created these Frequently Asked Questions to help you all understand the Child Tax Credit and what it means for you.
FAQ’s
What is the Child Tax Credit?
The Child Tax Credit is a tax credit that parents and caregivers can use to lower how much they need to pay in taxes. The amount depends on how many children they have and the ages of the children.
What changed about the Child Tax Credit?
There are a few main things that changed which will help families.
Credits increase from $2,000 to $3,600 per child under 6 and $3,000 for children older than 6.
The credit would also be fully refundable.
Money from the credit will be split: Half will be paid through the tax refund and the other half will be paid monthly from July to December.
There is no $2,500 earnings floor.
Families in Puerto Rico can receive the credit.
If I am eligible for the Child Tax Credit, does this mean I am going to get money in the mail?
Yes, because of the changes to the Child Tax Credit, the IRS will be sending out money to families — depending on how many and their ages starting in July.
Okay, how much money?
Families with kids under 6 will receive up to $3,600 per child under the new COVID relief bill. Families with children aged 17 and under will receive a credit of $3,000 per child. Families with older kids are also eligible: You can claim $500 for each child aged 17 and 18, or for full-time college students between the ages of 19 and 24.
This is for children who are considered related to you and live with you for at least half the year.
You can go here for a useful calculator.
How do I know if I’m eligible?
The income requirements are broad.
If you’re part of a married couple that files jointly, you are eligible if your adjusted gross income is less than $400,000.
If you’re an individual with an adjusted gross income under $200,000, you are eligible.
You will receive less money if:
- You file individually and earn more than $75,000 a year, or
- You file as a head of household and earn more than $112,500 a year, or
- You file with your spouse and earn more than $150,000 a year.
Will my eligibility be based on my 2019 taxes or 2020 taxes?
Since the tax deadline for 2020 is before July, this will likely be based on 2020 tax returns.
How will I receive my payment in July?
If you filed taxes in 2019 or 2020 or received a stimulus check, you should get a direct deposit. If the IRS does not have your current banking information, then keep an eye out for a check in the mail.
If you do not see a direct deposit payment Thursday, you can visit the Child Tax Credit Update Portal to see whether your information is up to date.
How do I claim my eligibility for this?
We don’t know the answer to this question yet.
Should I expect money after December from this?
Right now, this extra payment is only for this year.
Source: Cnet
