|
?:reviewBody
|
-
In March 2021, U.S. President Joe Biden signed a $1.9 trillion stimulus package named the American Rescue Plan Act to help Americans financially survive the COVID-19 pandemic. Among its various relief programs, the law expanded an existing Child Tax Credit to aid some low- to moderate-income families cover new expenses or job losses. About two months later, Biden administration officials said the IRS would kick-start advance monthly payments of the tax credit. Almost immediately, several people turned to Snopes to learn what that announcement might mean for their bank accounts. Below we lay out everything you need to know about the expanded tax credit, including who's eligible for it, when eligible Americans will have access to the payments, and how they'll receive them. Yes, qualified families will start receiving payments of the Child Tax Credit (amounts listed below) beginning in mid-July, without any action required, according to federal officials' announcement in mid-May. The child tax credit is a fully refundable tax credit, meaning no one has to pay the money back. The monthly payment system is new for this type of government subsidy. Typically, recipients of the credit received the bonus annually as part of their annual federal tax refunds. But in 2021, for the first time, Biden's administration was preparing to distribute half of the money as monthly installments until the end of 2021 to help families plan budgets during the pandemic, according to news reports. With today’s announcement, about 90% of families with children will get this new tax relief automatically, starting in July, Biden said in a May 17 statement. The administration estimated that percentage to equal about 39 million households. As of this writing, the IRS was preparing to issue the monthly payments beginning on July 15 and continue with the installments on the 15th of every month until December (unless that date is a holiday or weekend). Let us note here: All qualifying taxpayers can opt out of the advance payments and instead wait for one large payment in 2022, when they file the current year's taxes. More details on how to communicate that request to the IRS are below. The IRS calculated eligibility based on taxpayers' 2019 or 2020 tax return — whichever is the most recent on file when it starts distributing the payments. Also, qualified recipients had to have lived in the U.S. for more than half of that year, among other criteria. Of that group, anyone who claimed dependents aged 17 and younger (as of the end of the end of the 2020 tax year), and who tallied equal to or less than $75,000 (single tax filers), $112,500 (heads of households) or $150,000 (married couples) in modified adjusted gross income qualified for the credits' maximum amounts. For the purpose of this report, we'll call that category of taxpayers full recipients of the expanded credit. Meanwhile, certain higher-paid parents were eligible for the financial help, too, just at lower amounts. For instance, families who earned less than $200,000 (single filers) or $400,000 (married couples) may still qualify for part of the credit, while payments to households above those thresholds would continue phasing out or not qualify at all, Forbes reported. In a statement outlining eligibility criteria, the IRS urged families to file their 2020 tax returns as soon as possible, in order to make sure they're eligible for the appropriate amount of the [credit], even if they did not earn any income for the year. Yes, the March COVID-19 relief package increased the credit's amount from $2,000 to $3,600 for every child under the age of 6, and $3,000 for every older child younger than 18. Also, the scope of the credit expanded: previous tax laws barred parents of 17-year-olds from writing them off for the credit. Put another way, parents' total payments depend on the number and ages of their children. There is no cap on the amount of money parents of multiple children can receive, according to the nonpartisan Urban-Brookings Tax Policy Center. Software engineers with the Polish-based Omni Calculator have established an interactive calculator (here) to help families determine their 2021 child tax credit amounts. The higher credit was temporary, as of this writing. The previous payments — $2,000 per child — were set to return in future tax seasons, pending congressional intervention. Most full recipients will receive half of their sum via monthly installments totaling up to $250 (for each child between 6 and 17 years old) or $300 (for each preschool child or infant) between July 15 and mid-December. In other words, a qualifying family with two young children — a toddler and preschooler — would receive a monthly payment of $600 until the end of 2021. After that, that group will receive credits for any remaining money when they file their 2021 tax returns the following year, according to Fortune. Kathy Pickering, H&R Block's chief tax officer, told that news outlet: In the past, you just claim the credit and you got it in your refund. Next year, you'll be reconciling how much you got in advance, and how much you're entitled to, so that you get the remainder of what you're due on your tax return. But how will parents actually receive the money? Earlier this year, the IRS announced it would launch an online portal for taxpayers to manage the payments. However, in mid-May, the agency said it would send the payments automatically — either via direct deposit into recipients' bank accounts or by mailing them checks or prepaid debit cards — and most taxpayers do not need to do anything. The method depends on people's information on file with the IRS. All in all, Biden administration estimated about 80 percent of recipients will receive the money via direct deposit, The Washington Post reported. See the agency's website (here) to ensure your access to the payments, if you qualify. In total, the expanded credit is estimated to cost the country approximately $100 billion per year, according to the Committee for a Responsible Federal Budget, a nonpartisan think tank.
(en)
|
![[This page as RDF]](http://data.gesis.org/claimskg/static/rdf-icon.gif){kind=icon}