Families with children could get thousands of dollars more this year and next.
Will the revised child tax credit be extended to 2025? On Wednesday, President Joe Biden called for payments for the new child tax credit to extend “at least through the end of 2025” during a joint address to Congress. For now, the payments are set to begin this July and finish in 2022. If you’re eligible, you can receive up to $3,600 for each of your qualifying dependents — you can calculate your total here. Plus, here’s some advice for how to spend your payments.
To get the full $3,600 payment, your child must be age 5 or younger. For the $3,000 payment, kids need to be between ages 6 and 17 (kids older than 17 may qualify you for a partial payment). The total amount you’re eligible for will be split: Six monthly payments will arrive this year with the rest of the money coming with your tax refund in 2022. Currently, the increase is only good for this year, so it’ll be up to Congress to decide whether to expand it for the next few years.
Keep reading for more 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, including additional weeks of unemployment benefits. Also, here’s how to claim up to $16,000 in child care expenses on your 2021 taxes. 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 revised child tax credit checks last? Will they be permanent?
The child tax credit for 2021 is right now a temporary boost lasting only through the beginning of next year. Any changes to a 2022 child tax credit would need to happen in a separate bill. Biden could extend the credit to 2025 as part of his American Families Plan, but it would have to pass through Congress.
According to a report by the Wall Street Journal, Biden spoke with lawmakers on April 20 in the White House. One member of Congress said the president wanted to make the boosted child tax credit permanent, but that it would have trouble getting through the Senate. Biden said he planned to propose an extension to the credit for several years.
“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 is the child tax credit and how is it different now?
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 per qualifying dependent 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.
What’s the IRS child tax credit portal, and when will it launch?
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.
See how much your family could get with the new child tax credit
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.
When will I get my first child tax credit check?
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.
Your tax questions answered in 3 minutes
What if I just want to get one large payment?
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 — here’s how.
How did Biden’s stimulus plan update the child tax credit for this year?
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 will be fully refundable.
- Money from the credit will be split: Half will be paid monthly from July to December, and the other half will be paid through the tax refund in 2022.
- 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 find out if my family is eligible for the child tax credit?
Families with children under the age of 6 will receive up to $3,600 per child under the new COVID relief bill. Families with kids age 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 age 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 newborn baby in 2021?
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 the deal 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 revised 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 2021 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.
Keep track of the coronavirus pandemic.
Source by www.cnet.com