Many mother and father to obtain $250 to $300 per baby from IRS beginning subsequent month
Our 11 News Call For Action team writes a weekly column for our news partner The Gazette. You can find previous columns here.
COLORADO SPRINGS, Colorado (KKTV) – The Internal Revenue Service recently announced that it has started sending letters to more than 36 million American families who may be eligible for monthly child payments.
According to the IRS, there are several key changes to the child tax credit this year, including increases for many families. The credit also covers children who will turn 17 in 2021, and taxpayers can receive a portion of their credit in monthly payments before filing their 2021 tax returns.
“The qualifying child credit is fully refundable, which means taxpayers can benefit from the credit even if they have no earned income or owe no income tax,” the IRS also said.
Previously, the child tax credit was capped at $ 2,000 per year for each eligible child. Under the American Rescue Plan Act, passed in March, payments were increased to $ 3,600 per eligible child under 6 years old and up to $ 3,000 per eligible child 6-17 years of age. That’s equivalent to monthly payments of $ 250 to $ 300 per child.
The amounts will be reduced for incomes greater than $ 150,000 for married taxpayers filing a joint tax return, $ 112,500 for householders, and $ 75,000 for all other taxpayers, the IRS said.
As of now, the increased payments will only apply for tax year 2021. According to the IRS, funds will be transferred by bank transfer or check from July 15. Payments will also be issued on August 13, September 15, October 15. November 15th and December 15th.
The IRS said it was calculating payment amounts based on taxpayers’ 2020 tax returns. If that return is not available, the IRS said it will use the 2019 return.
11 News spoke to a local financial planner about what parents need to know about the extended child allowance.
Nathan Archuleta of Summit Wealth Group suggests families should pay the monthly payments instead of opting for a lump sum at tax time.
“With this extra payment and every incentive and really every money that comes in, our biggest advice is always to pay yourself first,” Archuleta said. “Take care of the essentials – food, shelter, transportation – and from there we can work to build a more solid financial base.”
There are a few requirements that you must meet in order to receive the child tax credit.
“Your child must be a US citizen. You must have a social security number for your child, ”Archuleta said. “You have to let the child live with you for about six months, so there are some regular IRS requirements that you still need to meet.”
According to Archuleta, there is no reduction in payments if you pay back taxes or child support, but if you have private creditors or garnishments, it could affect payments.
The Associated Press reports that nearly 88% of children will receive the benefits without their parents taking any additional action.
The IRS said it would provide more information on the prepayments shortly. Visit www.IRS.gov/childtaxcredit2021 for updates.
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