The new rules around the child tax credit determine who does -- and doesn't -- get the money.
Sarah Tew/CNETWhile parents who share custody can separately claim one child as a dependent, can they both get the child tax credit payment? The advance payments start in July and will be sent monthly through December, with the rest of the money coming with your tax refund next year -- but you will have the option to opt out of the monthly checks when the IRS portal opens.
If you have kids under age 18, you could get payments as large as $3,600 with the advance child tax credit. But there are requirements for your kids (babies born in 2021 are eligible), and your adjusted gross income plays a role. More importantly, parents who pay little to no federal tax will get the full amount they qualify for this time (lower-income families were excluded in the past).
So how is the child credit expansion different now, who's eligible for a payment and will parents who share joint custody of a child each get money? We'll explain. Plus, here's more on the current stimulus check timeline, how to track that payment and what to know about the amended tax form. Also, you could get up to $16,000 back for child care expenses.
Only one parent in a shared custody situation can get the payment
With the first two stimulus checks, parents who aren't married but share joint custody of a child could each receive a payment for the same child if they alternate years claiming the child on their taxes. With the new bill, Congress worked to close off that loophole for the third stimulus checks.
Can parents who share custody of a child take advantage of a similar loophole with the new temporary tax credit? No, said Elaine Maag, a principal research associate with the nonpartisan Tax Policy Center. Only one person can claim the credit for a given child, Maag told us. And if you incorrectly claim a child this year, you may have to repay all or part of the payment next year.
Repaying any child tax credit overpayment is a departure from how the stimulus checks were handled. Typically, if you received an overpayment, you don't need to send it back. (Here are situations where you'd need to return a stimulus check payment to the IRS.)
Watch this: Child tax credit: How much are you getting?
3:52
If you owe past-due child support, will your child tax credit payment be seized to cover it?
According to the Congressional Research Service -- Congress' public policy research institute -- the new law exempts the periodic child tax credit payments going out this year from offset for past-due child support. However, the amount you claim as a credit on your 2021 tax returns in 2022 could be subject to offset, CRS said, similar to how stimulus payments claimed as a Recovery Rebate Credit could be redirected to cover an overdue debt.
How does the advance child tax credit work?
Before the changes this year with the American Rescue Plan, eligible families could claim a tax credit for their qualified children when they filed their taxes. The credit would reduce the amount of taxes they owed. That payment rule, however, excluded lower-income families who didn't owe federal taxes and wouldn't benefit from a tax saving with the credit.
With the new law, the credit is "fully refundable," so qualifying families will receive the full dollar amount even if they don't owe income taxes. Families will receive half the credit this year through period payments starting in July and the second half of the credit in 2022 when they file their 2021 taxes during next year's tax season. If instead, you'd rather get one check, the IRS will let you choose to receive the full payment next year when you file. Here are more details on how the child tax credit payments will work.
More than 9 out of 10 families with children will qualify for the expanded child tax credit.
Sarah Tew/CNETDo I qualify for the advance child tax credit?
The American Rescue Plan temporarily expands the child tax credit from $2,000 per child 16 years old and younger to $3,600 for children age 5 and younger and to $3,000 for children age 17 and younger. If you've got dependents between the ages of 18 and 24 who are enrolled in college full-time, you can receive $500 each for them, too.
The temporary expansion also makes the credit available to families in all US territories. Previously, the refundable credit was available to families in Guam, the Virgin Islands, the Northern Mariana Islands and Puerto Rico.
Watch this: Your tax questions answered in 3 minutes
3:26
The amount your family could get in total
Over 90% of all families with children -- from lowest to highest qualifying incomes -- will receive an average benefit of $4,380, according to the Tax Policy Center. Half the amount will go out this year periodically, starting this summer in roughly equivalent payments, and the second half next year when you file your taxes. Calculate your payment total here.
For more information on other funding, here's how to estimate your third stimulus check, how to track your payment and what we know about a possible fourth stimulus check so far.
"share" - Google News
May 16, 2021 at 06:00PM
https://ift.tt/3uVC7gc
New child tax credit 2021: 5 key things for parents who share custody - CNET
"share" - Google News
https://ift.tt/2VXQsKd
https://ift.tt/3d2Wjnc
Bagikan Berita Ini
0 Response to "New child tax credit 2021: 5 key things for parents who share custody - CNET"
Post a Comment