COLUMBUS, Ohio (WCMH) – The American Rescue Plan Act of 2021 dramatically increased the child tax credit – up to $ 3,600 per child, ages five and under, for those who qualify.
You don’t need an income to get the credit, although you do have to file an income tax return with your name, social security number, and other vital details.
Child Tax Credit Payment Calculator
Use the calculator below to estimate how much you could receive in periodic child tax credit payments as of July 202.1
How the Child Tax Credit Has Changed
Mark Steber, Director of Tax Information, Jackson Hewitt Tax Service, spoke to NBC4 about the changes in the law, who the beneficiaries are and how much they should receive.
“The Child Tax Credit has been around for decades and it’s a very popular tax credit for all types of payers, tens of millions take advantage of it every year, and historically it was around $ 2,000. per child, ”Steber said.
“This is a much larger credit for potential taxpayers for the 2021 tax year, it can reach $ 3,600 per child five and under. And they are raising the age of eligibility: for 6 to 17 year olds, it is again $ 3,000, compared to $ 2,000.
“And they even went into the architecture for the old credit, the $ 2,000. If you are not eligible for the $ 3,600 or $ 3,000, if your age or income does not allow you to qualify, you may still be eligible for the $ 2,000 credit. “
Who is eligible for the Expanded Child Tax Credit?
Eligibility is determined based on Adjusted Gross Income (AGI), the amount of income reported after deductions.
- A single declarer – Phase-out begins at an AGI greater than $ 75,000
- Head of household – Phasing out starts at an AGI of $ 112,500
- Joint deposit – Phasing out begins at an AGI greater than $ 150,000
- Child aged 5 and under – Maximum credit of $ 3,600 each
- Child from 6 to 17 years old – Maximum credit of $ 3,000 each
- Gradual elimination – The maximum value of the tax credit decreases by $ 50 for each $ 1,000 of income above the AGI limit.
Steber says the number one pitfall for taxpayers is confusion. It is difficult to determine what credit you are getting, classification of addictions, custody, and income level. In addition, there is a new possibility to grant certain taxpayers part of their credit – up to half, monthly, from July – which they will reconcile during their next tax return.
“But at its simplest level, a larger tax credit, millions more people will qualify for a larger amount. They also made it fully refundable, which is a drastically significant change from the old credit, where you could offset your liability and then get up to around $ 1,400, ”Steber explained.
But what if your income is low or zero? You still have to file a tax return, and the IRS will cut a check or put the money in your account. It’s a big change, and very different from past years. As Steber explains:
“If they have eligible dependents aged five and under, they will simply put [that information] on their income tax return after completing some of the questions and required information: name, social security number, generally relationship, and number of months at home … You will be entitled to a refundable tax credit of up to at $ 3600 on your tax return [per qualifying child].
“If you had zero income, low income, divorced, unemployed, laid off, injured, unable to work – you would get $ 3,600 per eligible dependent… Now as the law was drafted, if that was on the tax return in 2020, tax return for the current year, and it looks like you will likely have the dependent next year, the IRS will advance half of these funds to taxpayers in the same place where they got their refund this year, by direct deposit or by check or by an account or some other way to get their tax refund.
“This is how they will receive the advance payment. But ignoring the whole prepayment part: $ 3,600 for five years and under; $ 3,000 tax credit, ages 6 to 17. And if you get older and still qualify because of your income, you can get up to $ 2,000 in tax credits. “
You don’t need a bank account for the IRS to put the money in. The IRS will send you a paper rebate check, mailed to your home, if you filed a tax return with the correct information, Steber says.
And finally – there is no limit on the number of children. There is a limit to the amount of income you can earn, $ 150,000, before you start to lose some of the gradually wiping out credit for high income earners, Steber concluded.