Families must file a 2020 tax return to receive the new $ 3,000 child tax credit
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Millions of families with children ages 17 and younger will soon be receiving hundreds of dollars a month as part of a new, expanded tax credit under the American Rescue Plan.
To make sure their families get the payment, parents need to do one thing: file a 2020 tax return.
“Families must file a 2020 tax return or the IRS will not have the information needed to provide this child tax credit,” said Elaine Maag, research fellow at the Urban-Brookings Tax Policy Center.
The increased tax credit is part of the US $ 1.9 trillion rescue plan that President Joe Biden signed in March. It increases the annual benefit per child 17 and younger from $ 2,000 to $ 3,000 in 2021. There is an additional benefit of $ 600 for children under 6 years of age for the 2021 tax year.
The IRS plans to send monthly payments starting in July – that’s about $ 250 for children over 6 years old and $ 300 for children under 6 years old – Commissioner Charles Rettig said Tuesday. These payments will continue through December, and families will claim the second half of the total loan when they file their 2021 tax returns in 2022.
Full Extended Benefit is available to all children under the age of 17 in families with 2020 Adjusted Gross Income of less than $ 75,000 for a single parent and $ 150,000 for a married couple applying together.
The increased credit begins to expire for higher income taxpayers and ends for individuals earning $ 95,000 and married couples who collectively earn $ 170,000.
Everyone should file a 2020 tax return
Currently, filing a 2020 tax return is the only way to prove to the IRS that your child is eligible for the credit. This means that all Americans with children should file a tax return regardless of income.
“We need the return information,” Rettig said in a March hearing with the House Ways and Means Committee, citing programs like the Earned Income Tax Credit and the Child Tax Credit.
The American bailout plan not only increases the amount of money families receive through the child tax credit, it also removes the minimum income required to be eligible for the CTC and makes it fully recoverable.
Filing a tax return is important for other reasons.
Families may be eligible for credits in excess of the child tax credit or may be eligible for a refund from the IRS. In addition, filing a return is the only way to get early payment for economic effects that you were entitled to and did not receive.
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Avoid the fear of tax filing by following the steps below
The $ 3,000 child tax credit is due to begin in July, according to the IRS
These unfortunate taxpayers still have until April 15th to pay
Of course, things could change in the future. The IRS is working on the implementation and launch of an expanded child tax credit portal that may offer the ability to add new applicants, Maag said. However, she added that no legislation has yet been put forward to support this.
That means Americans with children under the age of 17 should work to prepare and submit their 2020 returns when they can. The IRS offers a number of free programs that Americans can use to fill out and file tax returns for 2020.
Most taxpayers have until May 17th to file their tax returns as the IRS has extended the filing season.
To see how much to expect, the personal finance website Grow has created a calculator that takes into account your enrollment status, annual income, and the number of your loved ones.