The new rules around the child tax credit determine who does -- and doesn't -- get the money.
Sarah Tew/CNETThe expanded child tax credit payments will start arriving in just months, giving families thousands of dollars more between this year and next. This is assuming they have children who meet the requirements (babies born in 2021 are included). It also depends on their adjusted gross income. The payments will start in July and will be sent out monthly until December -- you'll need to claim the rest of the money on your 2021 taxes. But if you share custody of a child, are the rules different for how the child tax credit payments will work?
Families with kids under age 18 could get payments as large as $3,600 with the expanded child tax credit. More importantly, parents who pay little to no federal tax will get the full amount they qualify for this time. Previously, lower-income families were excluded from the entire amount they were due because they didn't pay the specified amount in taxes.
So how is the revised credit 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.
Are parents with joint custody of a child both eligible for a 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 being sent out now.
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
Can child tax credit payments be seized to cover past-due child support?
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, the Congressional service said, similar to how stimulus payments claimed as a Recovery Rebate Credit could be redirected to cover an overdue debt.
How exactly does the revised 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 as soon as 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/CNETWho's eligible for the revised 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
How much can families get between this year and next?
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.
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.
"payment" - Google News
April 20, 2021 at 06:00AM
https://ift.tt/3ei3xWy
Child tax credit and shared custody: Can both parents get a payment for the same kid? - CNET
"payment" - Google News
https://ift.tt/3bV4HFe
https://ift.tt/2VYfp89
Bagikan Berita Ini
0 Response to "Child tax credit and shared custody: Can both parents get a payment for the same kid? - CNET"
Post a Comment