What to Know About New Child Tax Credits Starting July – NBC 5 Dallas-Fort Worth
The IRS says new monthly child tax credits will arrive in bank accounts starting July 15. Some of you will see monthly payments of up to $ 300 per child.
It’s part of the US bailout that was enacted in March. It increased the Comprehensive Child Tax Credit, expanded it to include 17-year-olds this year, and added another annual benefit of $ 600 per child under six.
Taxpayers with children usually see the child tax credit when they file their income tax return. Half of the newly enhanced child tax credit will be distributed in monthly installments from July to December in the form of an advance credit. You can claim the other half of the credit when you file your 2021 federal income tax return.
Read on to learn more about who qualifies for enhanced credit.
Who gets the most? It depends on your income and the age of the children
Families will receive up to $ 3,000 per child aged 6 to 17 for the 2021 tax year or $ 3,600 per child under six.
Your income is also part of the equation.
The IRS says you will receive the maximum enhanced credit if your adjusted gross income is $ 75,000 per year or less for a single filer, $ 112,500 or less for heads of households. Spouse filers or eligible widows or widowers who earn $ 150,000 or less will also receive the maximum enhanced child tax credit.
The amount of improved credit gradually disappears for higher incomes.
For example, if you are married with a combined income of $ 100,000 per year and have a toddler, you will receive a child tax credit of $ 3,600 for 2021. Monthly payments would total 300 $ per month for six months. The rest will be taken into account as a credit on your 2021 federal income tax return.
What should I do to get the payments?
North Texas CPA Kedra Flowers explains that you don’t have to sign up to receive monthly payments.
âIf you qualify, you don’t have to do anything. The IRS will calculate how much you qualify for and start those payments for the remainder of the year, âFlowers said.
The IRS uses the information from your 2020 tax returns – or 2019 if this is the last return processed.
âThey’re similar to what happened with the stimulus. People search and go, why haven’t I received this payment? Because they haven’t filed or these statements haven’t been processed, âexplained Flowers.
What if I don’t want the monthly payments?
Since this is an early tax credit, Flowers explains that you’ll need to settle with the IRS when you file your 2021 return if it turns out you’re not eligible for the payments.
âIf you were not eligible for this credit, you will have to repay this money. It’s going to be added or taken out of your tax refund or added to what you owe, âFlowers said.
Flowers explains that there is an exception to the overpayment reimbursement for a single filer who earns less than $ 40,000 per year or for couples who earn less than $ 60,000 per year.
If you’re not sure if you qualify for the credit for the 2021 tax year and are concerned about having to repay overpayments, Flowers said consider removing you from the monthly advance payments and claiming the full credit. when you file your income taxes.
You can also decline monthly payments if you just prefer to get a larger tax refund.
By the end of June, the IRS said it would issue instructions on how to opt out of advance payments through an online portal.
The IRS has said that the payments will come to you the same way you received your tax refund or stimulus payments. For most people, it is by direct deposit to their bank account.
If you haven’t filed a tax return in the past two years and haven’t signed up for Stimulus Payments, you can use the Non-Filer Registration Tool here.
The enhanced child tax credit is temporary – for tax year 2021.
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