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Checks for Child Tax Credits: Parents Sharing Custody Need to Know



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About 90% of children in the US will benefit from the increased payments.

Sarah Tew/CNET

If you have a child who qualifies for the child tax credit, you can expect your first payment on July 15th. From then on, the checks will arrive monthly throughout 2021 – that is, unless you opt out of the partial monthly checks through the IRS Portals next month. But how does it work for parents who jointly share custody of a child? Will the IRS send both parents a payment?

Parents who share custody of a child have a number of rules, including who? qualify for a payment. For example, as a parent you can a total of up to $3,600 for each child younger than 18 years, and babies born in this year qualify. Even parents who pay little to no federal tax receive the full amount for which they are eligible, while in the past lower-income families were excluded.

There are also requirements your family members must meet and limits on the money you get based on your adjusted gross income. As a parent, you should also know that you cash back for childcare expenses – up to $16,000. And if you haven’t received your recent stimulus payment, you may want to know when can you expect it?, how follow it and what you need to know about the amended tax form.

1. Can both parents get the monthly payment in a shared custody situation?

With the first two stimulus checks, parents who were not married but jointly share custody of a child each can get a payment for the same child if they had claimed the child on their taxes for years. With the most recent stimulus package, Congress closed that loophole for the third stimulus checks.

Can parents who share custody of a child take advantage of a similar loophole with the new temporary tax credit? No, said Elaine Maag, principal investigator at the impartial Tax Policy Center. Only one parent can claim the credit for any given child, Maag told us. And if you incorrectly declare a child this year, you may have to repay (part of) the benefit next year.

Reimbursing overpaid child tax credits is a departure from the way the stimulus checks were handled. If you have received an overpayment, you usually do not need to return it. (Here are situations where you should do this) return a stimulus check payment to the IRS.)






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2. Is the money from the child discount used to pay overdue alimony?

According to the Congressional Research Service — Congress’s public policy research institute — the new law exempts periodic child tax credit payments due this year from settlement for child support arrears. However, the amount you claim as a credit on your 2021 tax return in 2022 can be offset, CRS said, similar to how stimulus payments claimed as a credit for recovery discount could be forwarded to cover an overdue debt.

3. How does the new children’s discount work?

For the changes this year with the American rescue plan, eligible families could claim tax relief for their qualified children when they filed their tax returns. The credit would reduce the amount of taxes owed. However, that payment rule excluded lower-income families who did not owe federal taxes and would not benefit from a tax savings with the credit.

With the new law, the credit is “fully repayable,” so eligible families will receive the full dollar amount even if they don’t owe income tax. Families will receive half of the credit this year through periodic payments beginning in July and the second half of the credit in 2022 when they file their 2021 taxes during next year’s tax season. If you prefer to get one check instead, the IRS lets you choose to receive full payment next year when you file your application. Here are more details about it: how the payment of the child tax credit works.

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Some 39 million households are automatically eligible for monthly child tax credit checks.

Sarah Tew/CNET

4. What are the conditions for eligibility for the new child discount?

The American Rescue Plan temporarily expands the child tax credit from $2,000 per child 16 and under to $3,600 for children 5 and under and to $3,000 for children 17 and under. If you have family members between the ages of 18 and 24 who are studying full-time in college, you can also receive $500 each for them.

there are iincome limits and phasing out rules. If your adjusted gross income is $75,000 or less, single parents who pay taxes qualify for the full amount of the child tax credit, but that amount changes with incomes over $75,000.

The temporary expansion also makes the credit available to families in all US territories. Previously, the repayable credit was available to families in the US states of Guam, the Virgin Islands, the Northern Mariana Islands and Puerto Rico.






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5. How much money can each family get in total?

According to the Tax Policy Center, more than 90% of all families with children — from the lowest to the highest qualifying income — receive an average benefit of $4,380. Half of the amount will be spent periodically this year, starting this summer in roughly equivalent payments, and the second half next year when you file your tax returns. Calculate your payment total here.

To learn more about other money you may owe, follow these steps: estimate your third stimulus check, how track your payment and what we currently know about a possible a fourth stimulus check.


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