5 Things To Know About Enhanced Child Tax Credit
DALLAS (CBSDFW.COM) - Starting next month most American families with children will be receiving monthly checks from the federal government.
An estimated 36 million families nationwide will benefit from the largest child tax credit ever.
Here's what taxpayers need to know:
1. Child credit increased to up to $3,600 per child
The child tax credit is not new concept. In previous years, parents filing taxes claimed a $2,000 credit per child.
Under the new rules, parents can claim $3,000 per child ages 6 to 17 and $3,600 for each child under the age of 6.
Single parents making $75,000 or less and married couples with an income of $150,000 or less qualify for the full amount.
2. Money comes early, starting July 15
The other big difference is this year families don't have to wait until they file their taxes to receive the credit.
Half of money will be given in advance in six monthly payments starting July 15.
"That's going to help a lot of families still struggling from the pandemic," said Dallas financial expert Jeff Dargatz. "This is cash in hand now. People can spend it now. They don't have to wait."
3. Most families don't need to do anything
For most eligible families who filed a 2020 or 2019 tax return, the IRS has all the information it needs so the payments will be automatic.
The IRS has created three online portals to help answer questions and resolve issues with the enhanced child tax credits.
The advance child tax credit eligibility assistant is simply a questionnaire to see whether a family is eligible.
4. Non-filers need to sign up
Families who don't make enough to file taxes need to provide the IRS with information to receive the benefit.
Much like with the stimulus payments, the IRS has a non-filer child tax credit sign-up tool for people to enter their information.
5. Some families with bigger 2021 incomes may want to opt out
If a family's income in 2021 is significantly higher than last year, the IRS might overpay the benefits as payments are based on 2020 tax returns.
This would only apply to families who exceed the income thresholds.
Parents can opt out of the advance payments by using the child tax credit update portal.
The IRS say the portal will also eventually allow taxpayers to update information such as bank accounts and home addresses as well as allow people to check the status of payments.
The IRS says those features will be available on the portal later this summer or in the fall.
