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Tax credits for children and shared custody: can every parent qualify for the same child?



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The new rules regarding the child discount determine who will and who will not receive the money.

Sarah Tew / CNET

Families with children under 18 can get a big boost in family income in the next 12 months thanks to President Joe Biden’s American rescue planThe new law includes a variety of financial aid for people suffering from the economic impact of the pandemic — from $ 1,400 Incentive Vouchers to federal unemployment controlsBut the extension of the child tax credit could be the part of the new emergency relief law that provides the most help to families.

With the new rules regarding the child discountmore than nine in ten families with children will do so payments received, starting this summerAnd just as important, families with little or no pay federal tax get the full portion for which they qualify, a change from the way the CTC had operated in the past, where lower-income families were excluded from the full amount they owed.

So what is the CTC, who is qualify for a payment, and can parents who jointly share custody of a child get any money this year? We have the answers below. Plus, here’s more on the third stimulus check who is eligible for that payment and what you need to know about the amended tax form

Can parents who jointly share custody of a child each receive compensation?

With the first two stimulus controls, parents who are not married but who share custody of a child can each receive compensation for the same child when they change years and claim the child on their taxes. With the new bill, Congress worked to close that loophole for the third stimulus vouchers now being sent.

Can parents who share custody of a child benefit from a similar loophole with the new temporary tax credit? No, said Elaine Maag, a leading research associate at the impartial Tax Policy Center. Only one person can claim the credit for a particular child, Maag said. And if you incorrectly declare a child this year, you may have to repay all or part of the benefit next year.

Refunding an overpaid CTC is different from the way stimulus checks were handled. If you have received an overpayment, you usually do not need to return it. (Here are situations when you should return a stimulus check payment to the IRS


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Child discount: how much do you get?


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Can your CTC payment be seized to cover overdue child support?

According to the Congressional Research Service – Congress’s public policy research institute – the new law exempts the periodic child discount allowances that are going out this year from netting for back child support. However, the amount you claim as a credit on your 2021 tax returns in 2022 can be offset, the Congressional Service said, similar to how incentive payments claimed as a Credit for chargeback discount could be diverted to cover an overdue debt

How does the CTC extension work?

Before the changes this year with the American Rescue Plan, eligible families could claim a tax credit for their qualified children when they filed their tax returns. The credit would reduce the amount of taxes they 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 refundable,” so eligible families will receive the full dollar amount, even if they don’t owe any income tax. Families will receive half of the credit this year through period payments starting 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’d rather get one check instead, the IRS will let you choose to receive full payment next year when you sign up. There are more details on this how the child discount payment will work

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More than 9 in 10 families with children are eligible for the extended child discount.

Sarah Tew / CNET

Who is eligible for the child discount?

The American Rescue Plan temporarily expands the CTC 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.

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

How much could you receive in 2021 and 2022?

According to the Tax Policy Center, more than 90 percent of all families with children – from the lowest to the highest eligible income – receive an average benefit of $ 4,380. Half of the amount will go out periodically this year, starting this summer with roughly equivalent payments, and the second half next year when you file your tax return.

To learn more about other funding, here’s how estimate your third stimulus check, how track your payment and what we know about a possible fourth stimulus check so far


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