Families with children could get thousands of dollars more this year and next.
On Wednesday, President Joe Biden discussed his American Family Plan proposal during an address to Congress, calling for an extension to the expanded child tax credit payments “at least through the end of 2025.” Right now, payments for the new child credit are scheduled to begin in July and end in 2022. Under the March American Rescue Plan Act, eligible families can receive up to $3,600 for each qualifying dependent. (Calculate your total payment here, and find advice for how to best spend your payments here).
Families who qualify for the child tax credit can receive $3,600 for children age 5 and under, or $3,000 for kids under the age of 17 (kids older than 17 may qualify you for a partial payment). The total amount will be split: half coming with a families’ tax refund in 2022 while the other half will be divided into monthly payments from July to December. Right now, the increase is only good for 2021, so it’ll be up to Congress to decide whether to expand it to the following years.
We’ll tell you all the details about the new child tax credit, including how much money you could get, whether the benefit will become permanent and how you can update the IRS on changes to your family through a portal. Plus, here’s everything else the new stimulus bill brings, from new health care and insurance to additional weeks of unemployment benefits. Additionally, if you haven’t received your third stimulus check yet, here’s how to track it. This story has been updated.
How long will the expanded child tax credit payments last? Will they become permanent?
The child tax credit for 2021 is right now a temporary boost and will last only through one year. Any changes to a 2022 child tax credit would need to happen in a separate bill. Biden does want to extend the credit to 2025 as part of his American Family Plan, but it will have to pass through Congress.
Biden spoke with lawmakers April 20 in the White House and says he plans on proposing an extension to the credit for several years according to a report by the Wall Street Journal. One member of Congress says the president wants to make the boosted child tax credit permanent, but it could have trouble passing in the Senate.
“The American Families Plan puts money directly into the pockets of millions of families,” Biden said during his address to Congress on April 28. “Together, let’s extend the Child Tax Credit at least through the end of 2025.”
Child tax credit: How much are you getting?
What’s the IRS child tax credit portal, and when will it open?
The IRS said it will open a child tax credit portal by July 1 that will let you manage parts of your payment, such as whether you want to receive monthly payments through the end of 2021 or one sum in 2022 when you file your taxes. You will also be able to use the online portal to update the IRS on your family details, such as new qualifying children. The IRS hasn’t offered other details about how the portal will work.
Calculate how much your family could get with the extended child tax credit, here’s how
The new child tax credit could potentially bring your family more money this year, assuming you’re eligible. Fortunately, you don’t have to do the math yourself to find out how much money you can expect. Using our child tax credit 2021 calculator, you can enter your filing status, adjusted gross income and the number of children you’re claiming. Note that the calculator doesn’t store any information you input.
What is the child tax credit anyway?
At a basic level, the child tax credit is a credit that parents and caregivers can claim to help reduce their tax bill, depending on the number and ages of their dependents. For many, it may provide a much-needed source of relief as part of a 2020 tax year refund.
Previously, the child tax credit was a $2,000 credit parents could claim on their taxes for every child under the age of 17 (the same age range for child dependents that was used for the first and second stimulus checks). And if that credit exceeded the amount of taxes that a family actually owed, parents could still receive up to $1,400 as a refund; this is technically referred to as the additional child tax credit or refundable child tax credit. For example, a married couple with children ages 5, 10 and 12 would receive a total credit of $6,000 — unless they were due a refund, in which case they’d receive $4,200.
Your tax questions answered in 3 minutes
When will I get my family’s first child tax credit payment?
The child tax credit comes in two halves. The first half comes in the form of monthly payments. These checks will be split evenly and dispersed monthly starting in July until December. The second half comes as a tax refund on your 2022 taxes.
What if I don’t want 7 different payments?
If for any reason you don’t want to receive half your money in 2021, you will be able to opt out of monthly child tax credit payments. Learn more in our guide.
How did Biden’s stimulus package update the child tax credit for 2021?
The American Rescue Plan will temporarily give more money to families. Here’s everything that changes:
- 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 in 2022 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.
Here are more details on money for qualified dependents — and who counts.
With the child tax credit for 2021, you could get more than one check this year.
How do I know if my family is eligible for the child tax credit?
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.
The tax credit applies to children who are considered related to you and reside with you for at least six months out of the year.
Note that though the eligibility requirements are relatively broad, higher-income families may receive a reduced credit. But married couples filing jointly with an adjusted gross income under $400,000 are eligible for the full amount, as are individuals with an AGI under $200,000.
Stimulus plus-up payments: What you need to know
Under the new plan, the amount of the larger credit will start to phase out for single people earning more than $75,000 a year, heads of household earning more than $112,500 a year and married couples earning more than $150,000 a year. Here are more child tax credit eligibility details.
What if I have a new baby in 2021 after the checks are sent?
Bottom line: You’ll qualify, as long as you meet the income requirements. Here’s what to know about the child tax credit and 2021 babies.
What about if I’m in a shared custody situation?
Parents who share custody will not be able to both claim the 2021 child tax credit. Here are more details about a shared custody situation and the child tax credit.
Will the extended child tax credit be based on my 2019 or 2020 tax return?
It will likely depend. The IRS will be tasked with basing your eligibility for the child tax credit on your 2020 tax return, if that’s been processed by the first July payment. Otherwise — in the case of a tax return extension, for example — the agency would use your 2019 taxes to determine the amount you’re owed.
For more information, here’s everything in the 2020 stimulus bill, when the stimulus check could arrive and how to calculate how much money you’d get in a third check. Here is also how to track your payment and what we know about using direct deposit to receive your money.
Source by www.cnet.com