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With almost a week left for the Internal Revenue Service (IRS) to initiate shipments of the first monthly advance payment under the Biden Administration’s “Child Tax Credit”, some families will have to rush to take additional steps to alert the IRS of their eligibility.
Although for most eligible families, payments will arrive automatically either by direct deposit or paper check in the mail, in cases of low-income families who do not file taxes, they must submit their information and those of minor dependents of age as soon as possible to the IRS to be able to receive advance payments as of July 15.
Most taxpayers will not have to take additional actions to receive payments
In general, the IRS will process monthly deliveries using the information contained in either tax returns submitted by May 17, this year’s deadline. In case the entity does not have the one from this year, then it will use the one from 2019.
But if you didn’t file either one with the IRS, then you should file one as soon as possible. The IRS offers free tax preparation programs for low-income taxpayers.
This population also has the option of using the online tool “Non-filer Sign-up”, recently relaunched through IRS.gov.
Children must have a Social Security Number
Families will receive between $ 250 and $ 300 per month for each child, with no limit on the number of minors per household.
This year, the credit increased to $ 3,600 per child ages 6 to 17, and $ 3,600 for each child under the age of 6.
The minors in each family must have a Social Security Number. If parents do not have this card, they must at least have an Individual Taxpayer Identification Number (ITIN) to apply for the funds.
Apart from the number of minors in the household and their ages, the IRS relies on the income levels of the parent (s) to establish the amount to be paid per household.
Families who will receive the full amount
Individuals who earn more than $ 75,000 a year, $ 112,500 for single mothers or heads of household, and $ 150,000 for married couples filing jointly would receive the reduced payment or may not receive a payment.
Once your income exceeds the above thresholds, the IRS will begin to apply the adjustment for the gradual reduction in payment.
“For most people, the modified AGI is the amount shown on line 11 of your 2020 Form 1040 or 1040-SR. Above these income thresholds, the additional amount above the original credit of $ 2,000 Either $ 1,000 or $ 1,600 per child is reduced by $ 50 for every additional $ 1,000 in modified AGI, ”the agency explained on its website.
Taxpayers have the option of requesting a single payment for the credit as a refund in the next tax season when you file your 2021 return.
Taxpayers can unsubscribe to monthly payments and receive a single one-time payment
To that end, the IRS has enabled an option as part of the Child Tax Credit Update Portal that allows families to unsubscribe from monthly advance payments.
In at least three instances, people should request a full payment in 2022.
The first is if your income in 2021 is too high to be eligible for the credit, since if you receive early payments, you would then have to return money to the agency.
The second is whether someone else (a former spouse or other family member, for example) now qualifies to claim your child or children as dependents.
And the third is if your main home was outside the United States for more than half of 2021.
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Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.