While a fourth stimulus check might not be in the cards, a new $3,600 benefit for millions of Americans will now be on its way come July.
New direct monthly payments will be disbursed as part of an expanded child tax credit of up to $3,600 per child for working families, essentially creating a “fourth” stimulus check. Under the American Rescue Plan Act of 2021, the child tax credit has been increased to $3,600 per child under the age of 6 and $3,000 per child for ages 6-17. Previously, this credit only applied to children under 17. According to the National Law Review, the credit is fully refundable, and the $2,500 earned-income requirement is eliminated.
The best part is that taxpayers will receive half of this credit in monthly cash payments. This means that for the months of July through December, recipients will receive $250 to $300 a month for each qualifying child. Taxpayers will claim the remaining half of the credit next year, on their 2021 tax returns.
Taxpayers earning under $75,000 per year — $150,000 for married joint filers and $112,500 for heads of household — are eligible for the full credit. The credit will be reduced by $50 for each $1,000 in income above those thresholds.
It’s important that you check your filing data with the IRS. CNBC states that advanced payments are based on an IRS estimate from data like income, marital status and number and age of qualifying kids. Should that data be outdated, it could trigger an overpayment of the tax credit, which could require you to pay back any excess funds, according to CNBC.
IRS Commissioner Charles Rettig said in a statement to the Senate Finance Committee that the IRS will set up an online portal to help parents inform the IRS of any changes, Reuters reports. He also warned that there may be some technical difficulties in the beginning with the payment and portals, as this is a new IRS procedure.
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