The expansion of the child tax credits as part of the American Rescue Plan stimulus relief bill is slated to begin July 15.
The tax credit will allow for up to $3,600 per child for children under 6 years of age before the end of the year and $3,000 for each child over the age of 6 and up to 17 years of age before the end of the year.
The payments are to be sent in monthly installments of $300 per child through December with the remainder of the benefit to be paid in a lump sum next year around tax time.
In order to streamline the process, the IRS will create two online portals for eligible families with qualifying dependents to use to receive the credits. The portals will allow you to opt out of the monthly payments and, instead, receive a lump sum during tax time next year.
Do You Qualify?
In order to receive the full amount of the credits you must:
- Claim a dependent on your tax return. They can be newborns to children no older than 17.
- Make $75,000 or less OR file as a head of household with an adjusted gross income of $112,500 or less.
You’ll receive a partial payments if:
- You are a married couple filing jointly making more than $150,000. You will begin to get phased out if your adjusted gross income exceeds this amount.
- Child tax credits are also available if you have older children. If you have dependents that are 18 years old, you can receive up to $500 for each child. Nineteen- to 24-year-olds who attend college full-time also qualify you for up to $500 per child towards your total benefit payment as a part of the new stimulus bill.
The Online Portals
The IRS portals allow you to update your information and make sure you’re registered to receive the payments. If you have adopted a child, or had a new child this year or last, you must update this information via the portal to receive the benefits. Babies born in 2021 also make you eligible.
These changes are viewed as the addition of a dependent, and only help you receive more money from tax returns in general, and for stimulus benefits specifically. Making updates should not result in your needing to pay more taxes.
Important to note: If you are unmarried, and both parents claim the child as a dependent, it could cause trouble. The child must live with you six months out of the year in order for you to claim them and receive the benefit. More specific information on this is thought to come out in the coming weeks.
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