The Internal Revenue Service said Monday that it has begun sending letters to more than 36 million families likely to be eligible for payments starting in July under the recently expanded Child Tax Credit, one of the leading anti-poverty initiatives in President Biden’s stimulus plan, and announced the dates by which those payments are expected to reach bank accounts.
Biden’s $ 1.9 billion American Rescue Plan significantly expanded the Child Tax Credit for fiscal year 2021: it will now provide eligible parents with a credit of $ 3,000 for each child ages 6 to 17 and $ 3,600 for each child under the age of 6 years (compared to $ 2,000 per dependent child). up to 16 years).
Individuals earning up to $ 75,000 per year, heads of household earning up to $ 112,500 per year, and joint taxpayers earning up to $ 150,000 per year are eligible to receive the full amount of the credit.
The amount of the payments will be eliminated by $ 50 for every $ 1,000 in adjusted gross income above those thresholds.
The IRS will use the information from your 2019 or 2020 tax returns or the agency’s online non-taxpayer tool to determine eligibility.
Some of that money will come in the form of advance payments, either by direct deposit or paper check, of up to $ 300 per month per qualifying child on July 15, August 13, September 15, October 15, November and December 15, the IRS said on Monday.
Families can claim the remainder of the credit on their 2021 tax returns filed next spring.
$ 4,380. That is the average benefit that more than 90% of families with children will receive with the expanded credit. according to the Tax Policy Center.
The American Rescue Plan also made the Child Tax Credit fully refundable by 2021. Previously, it was only refunded up to $ 1,400 per child, and families needed to earn at least $ 2,500 to be eligible to receive some of that money. That means that many low-income families or families with no income that would not have been eligible for some or all of the previous credit (because they did not earn enough to owe taxes to qualify) can receive the full benefit in 2021.
What to watch out for
The IRS said it will send a second letter to eligible families with information about the estimated monthly payments they can expect to receive. The IRS is also expected to open an online portal where families can verify their eligibility, update information on income and qualifying children, check the status of their payments, and opt out of the program.
The White House has proposed extending the extended Child Tax Credit for another five years under the American Family Plan (which has yet to be adopted by Congress), but many progressives want the extended credit to be permanent. “No recovery will be complete unless our tax code provides a sustained path to economic prosperity for working adults and families,” 41 Democratic senators wrote in a letter to President Biden in March. “Your next Recovery Plan is the opportunity we have to make these loan expansions permanent.”
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