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Parents can now check their eligibility status for the expanded child tax credit and manage the monthly payments using two new online tools the IRS launched this week.
A child tax credit update portal allows families to determine whether they qualify for the enhanced tax credit by answering a series of questions.
Eligible families will receive up to $3,600 for every child under the age of 6 and $3,000 for every child ages 6 to 17, part of the American Rescue Plan that President Biden signed into law in March. Under the relief bill, families can receive up to $1,800 in cash per child through December.
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Another tool – the child tax credit update portal – lets families verify their eligibility for the credit and opt out of the monthly payments – worth about $250 to $300 per child – and instead receive a lump-sum payment when they file their tax return in 2022. Coming versions of the tool will allow people to view their payment history, adjust bank account information or mailing addresses and other features.
Half of the money will be paid out in cash on a monthly basis beginning July 15. From there, the IRS will deliver the monthly payments on the 15th of each month through December 2021. The remainder of the money will be claimed on families' 2021 tax returns; it will be paid directly to families after covering taxes.
Most families will begin receiving monthly payments automatically next month without any needed action, the IRS said.
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The tax credit will go to individuals earning $75,000 or less, married couples making $150,000 or less and a single parent filing as the head of household making up to $112,500. For instance, a family with a 10-year-old and a 4-year-old would be eligible for a credit of $6,600 if they earn less than $150,000. They would receive a credit of $550 per month through December, and then $3,300 when they file their taxes in 2022.
To qualify, the child needs a Social Security number and must have lived with the taxpayer claiming the credit for at least six months during the year.
The tax credit is tapered by $50 for every $1,000 a family makes over the income thresholds.
If families earn too much to qualify for the sweetened tax credits, they can still receive the $2,000 credit for their children if their income level is below $200,000 for individuals and $400,000 for married couples.
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However, because the enhanced credit is based on tax returns from 2019 and 2020, families that are earning more money in 2021 should be aware that if they are overpaid by the IRS, they will have to return that money next April during tax season.
"If you receive a total amount of advance Child Tax Credit payments that exceeds the amount of Child Tax Credit that you can properly claim on your 2021 tax year, you may need to repay to the IRS some or all of that excess payment," the IRS said on its website.
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June 23, 2021 at 11:36PM
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IRS launches 2 new online tools to help families claim boosted child tax credit - Fox Business
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