There has been more news coming in on the Child Tax Credit. And if you have qualified for it, here are some important new developments about the timeline. The most important is that you will get half of it this year. The rest of it will arrive in 2022 as credit for the tax return.
This credit has been vastly increased under the American Rescue Plan Act of 2021. It is expected that children living in poverty in America will be reduced by 45%. There is some other news regarding the check, including more about a new online portal to get information and update family data.
Your Child Tax Credit Amount Is Based On The Child’s Age
The Child Tax Credit has been divided into two levels and children younger than 6 will get $3,600. Children between the ages of 6 and 17 will be entitled to $3,000. It has been expanded from the previous level of $2,000 per child. The money will go directly to the eligible families, this is a first for the federal government. It will be sent as an advance payment of the 2021 tax credit. The money will go out periodically from July 2021 through December 2021.
The IRS is working out the details of the payments of the Child Tax Credit along with sending out the third round of your stimulus check. It is worth $1,400 max for each individual and dependents, based on their Advance Gross Income.
The IRS has also given out information on the schedule of the CTC checks. You also need to know about overpayments and the steps you can take if there are other errors in the check.
How Accurate Is The Timeline For The Delivery Of The CTC Payment?
The timelines are general and no accurate dates have been given out by the IRS. But from what information the IRS has given out the first payment will be in July 2021, whether it is monthly or under a different schedule, though there is doubt of the monthly schedule. But what is definite is the payments will not be completed by 2021.
Is There Anything Else To Know About The Child Tax Credit?
There is no clarity yet of the monthly schedule given that it will place additional pressure on the already burdened IRS. Sending out the payments every month is unrealistic for the authorities.
The credit is for the year 2021. The amount that you owe as part of your taxes is reduced by your gain from eligible dependents. This tax credit would normally have been part of a refund next year. But as the idea is to send the money earlier due to the economic crisis, the checks are being sent out as regular ‘advance payments.’
This also explains the reason the Child Tax Credit of 2021 has been split. The part this year is an advance that will benefit you and your family directly. The next part will affect the 2021 taxes that you will file in 2022.
Here’s What You Should Know If You Share the Custody of a Child
The rules were different in parts for the initial two checks paid out in 2020. Parents sharing custody and not married to one another were each entitled to claim for the child. This was possible if they claimed in alternate years. But this rule is not applicable this year.
If you are within the income limit as stipulated under the act, you could receive as much as $300 per child per month if they are below 6 years. For children aged 6 to 17, it will be $250 per month. Though, as stated, there are doubts about the payment being made monthly.
Details On This Year’s Child Tax Credit
You will receive half of the CTC payment between July and December 2021. You will get the rest as a credit against your tax returns that you will file in 2022.
The amount will phase out for individuals if the earnings are above $75,000 for the year. Those earning $80,000 and above will not get any amount. For the head of households, the corresponding figures are between $112,500 and $120,000. For married couples, it starts to decrease after $150,000 and those earning $160,000 or more will not be entitled to the Child Tax Credit.
How Will The Authorities Send The CTC Payment?
How you received your stimulus check will determine how your CTC check arrives. But it could change depending on several factors. For instance, if you have filed your tax returns for the first time after you received your stimulus payment, you could expect a direct transfer to your account. It is based on the new information that the authorities have with them.
If you have received your stimulus check through direct transfer to your account, expect the same mode of payment. SSI, SSDI, and other Social Security beneficiaries could get their payment through Direct Express card, the mode generally in vogue for such payments. The payment method to retired railroad employees and veterans could also be different.
Prepaid debit cards and a paper check will be sent out to those whose bank details are not available to the IRS as they are non-filers. They need to keep track of their mail through the free tool of the US postal service.
File Your Tax Return For 2020 To Make The Process Easier
Taxpayers need not file any amended returns. Payment will be routine for those filing their returns by the May 17 deadline this year. Even regular non-filers should file this year, as it will help the IRS get details of the dependents, including children who will get the Child Tax Credit payment.
An Online Portal For The Child Tax Credit By July
July 1 is the date for launching a portal though it will be built only after the tax season. This CTC portal will help recipients to log in and update any information. For instance, you could include information about a child born in 2021. Such information is usually given to the authorities in the tax returns file each year.
What If I Receive More As Part Of The CTC?
The rules are different for the CTC from the stimulus payments. You have to return any excess payments. This could happen if both spouses receive the amount for the same child by mistake. If your 2021 returns reveal that you were not entitled to the amount received as a child tax credit, you might have to return it. Update all information to prevent this from happening even before the CTC payments commence.
Is Claiming The Child Tax Credit Payment As A Single Payment Possible?
You can claim the full amount but only in 2022. It will be as credit in the tax returns for 2021 filed next year. It will be a deduction from your tax total. You can use the portal to set your preference.
Will The Child Tax Credit Payment Continue?
The CTC is scheduled till 2022 and ends with the tax filing season. But there have been discussions scheduled in Congress for making permanent the higher rates of payments. There is no definite information in this regard at the moment.