In July of 2021, millions of American families with children under 18 received their first Advanced Child Tax Credit payment. According to the Internal Revenue Service (IRS), over thirty-six million families were eligible to receive this tax credit.
This article will tell you everything to know about Child Tax Credit Payment. What is it? Are you eligible to receive a this tax credit? Read on and find out!
What Is Child Tax Credit?
Child Tax Credit is a tax benefit that taxpaying American families can receive for every individual child. It is a fully refundable tax credit. This tax credit usually was up to $2,000 per dependent child. However, for 2021 was raised up to $3,600 due to the Covid-19 relief package, the American Rescue Plan.
In 2021, eligible families had the option of receiving up to half of their credit in monthly payments of $250 to $300, depending on whether the dependent child was under six or not. And the remaining half of the credit will be sent out to these families as a lump sum after they file their 2021 taxes.
Who is Eligible for the Enhanced Child Tax Credit?
All American families who have dependent children under the age of 17 qualify for Child Tax Credit. As long as the parent or parents and the children both have a Social Security Number and they meet the specified income requirements, they are eligible to receive this benefit.
If your 2020 or 2019 tax return was filed and processed by the IRS, you should automatically start receiving these monthly payments if the information you provided meets the requirements.
Another requirement to be eligible for this Credit Benefit is that you must claim your child as a dependent and should pass certain relationship requirements. The child must be a daughter or son, adopted child, siblings, step-siblings, or someone from the family, like grandchildren or nieces and nephews. Also, the qualifying child should have lived with you for at least half of the year. For the year, you must have provided the child with at least half of their overall financial support.
Income Requirements
The income requirements to be eligible for child tax benefits are as follows:
Families can qualify if their modified adjusted gross income or MADI is less than $75,000 for single families, $112,500 for the heads of households, or if parents are filing jointly, their MADI should be less than $150,000.
If your family’s MADI is greater than these numbers, there is a second phaseout of credit. You can be eligible for it if your single income is less than $200,000 or $400,000 if filing jointly.
Low-income families who might not usually file tax returns can register for this credit on the IRS website.
Changes to Child Tax Credit in 2022
The child tax benefits are not going anywhere. But if there are no updates from Congress, the benefit will probably revert to the original and less generous amount of $2,000 per dependent child.
