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One of the characteristics of the American Rescue Plan for taxpayers with children is the expansion of the tax credit. Depending on the age of your children you could receive up to $ 3, 600 dollars for each of them .
The Internal Revenue Service (IRS) will automatically determine who is eligible to receive the credit this year and will be based on your income tax return. 2020 Y in case it has not yet been processed it will be in the declaration of 2019.
The agency is currently working on the creation of an online portal where you can use it to update your family or economic situation that makes you eligible to receive a higher or lower payment. The portal is scheduled to be operational from July 1 .
You can choose to receive the monthly direct aid that is expected to be sent from of 15 July or instead choose to receive a one-time payment as part of your tax refund in 2022 .
Reasons not to choose monthly payments
There are several reasons why you can choose not to receive monthly payments. One of them is that you could use that money as a form of savings for a purchase while other people have expressed that they seek to receive a single payment so that they do not have to return any of those advances. Last year several taxpayers received a higher payment from the IRS than they were entitled to , in the future they will have to return that extra money they have received.
Only couples who file a joint tax return and earn between $ 60, 000, $ 100 , 000 and $ 120, 000 dollars will have to return all or part of the amount of extra money that have received .
Only those who declared an average income of less than $ 40, 000 dollars per person or $ 60, 000 dollars in a joint return, will not have to return any payment .
How will the child tax credit be paid?
This time you can receive a monthly payment of $ 300 dollars for each child under 6 years of age or where appropriate $ 250 dollars for each child under 18 years at the end of the year . The IRS has confirmed that payments will begin on 15 July and will be paid on 15 of each month until December .
Monthly payments will cover half of the total credit and the next year, when you file the tax return, you will be able to claim the rest of the credit on your income tax return of 2021 . However, if you wish, you can choose not to receive the monthly payments in advance and claim the entire credit as a lump sum when you file the return next year .
How much money will you receive per child?
If you meet the requirements you can receive up to $ 3, 000 dollars for each child between 6 and 17 years at the end of 2021 . Each child under the age of 6 at the end of 2021 could receive up to $ 3, 600 dollars . The credit is fully refundable, so if you owe less than the amount of the credit, you will receive the excess as a tax refund.
According to the Plan of American Rescue, you can request a non-refundable credit of up to $ 500 dollars for the child tax credit if you have dependents of 18 years or children between 19 Y 24 years attending college full time, however, there will be no advance payment of this credit.
In this new stage of the program the child tax credit eliminated and l minimum income limit . The last adjustment to the program occurred in 2017 with the Tax Cuts Act and jobs. The credit was extended to $ 2, 000 dollars per child, but only $ 1, 300 dollars were refundable and the taxpayer had to prove that he earned more than $ 2, 500 dollars.
Even though the tax credit for children has existed for decades, near the 90 percent of families in the United States will be able to benefit from the expansion of the new credit program . With the modifications, the White House has mentioned that child poverty may be reduced by half during the .
President Biden has said that wants to extend the expansion of the child tax credit program until 2025 while his parliamentary group in Congress has expressed his wish that it be permanent as of this year as part of the American Families Plan.
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