FORT WAYNE, Ind. (WANE) — The Child Tax Credit will soon be on its way. But there are changes you should know about.
“There have been some changes,” Linda Troyer Tax Pro from Jackson Hewitt said. “The dollar amount has increased and the age restriction has changed.”
The American Rescue Plan passed earlier this year, increasing the existing maximum child tax credit to $3,600 for children under 6 and $3,000 per kid for children between 6 and 17. It also set up a framework to prepay a portion of those funds over the final six months of 2021 through the IRS. According to the feds, roughly 39 million households will begin receiving checks next month, “without any further action required.”
The IRS says those payments will be scheduled to go out on the 15th of each month unless that date falls on a weekend or federal holiday. That means these are the six dates we should expect payments to go out this year:
- July 15
- August 13
- September 15
- October 15
- November 15
- December 15
If you claimed children in 2019 and/or 2020 you should receive a letter from the IRS that will explain what your options are. A second letter will arrive in the following weeks that will tell parents how much they will be receiving.
At the end of December, early January parents will receive a third letter with a total of how much parents received. Parents are advised to hold on to that letter to give to their tax preparer for their 2021 taxes.
For those who don’t file taxes, didn’t file in 2019 and 2020, or didn’t go online to the IRS to receive the stimulus payment, they can file a zero tax return either electrically or by mail. Troyer recommends filing electrically because the IRS is still processing the 2019 tax returns that were mailed.
The IRS is planning to have a website where parents can go to update their information. That website is supposed to go live on July 1. With the first payment to begin on July 15, that gives parents just fifteen days to opt-out of the payments and/or update their information. If your information has not changed since filing your 2020 taxes and want the payments you do not have to log on to the website.
But what happens if you are divorced or separated from your child’s parent? The parent that claimed the children as dependents in 2020 will receive the payment. If parents take turns claiming the kids to every other year, that makes it more complicated.
Say a parent claims the kids in 2020 but won’t claim them in 2021. That parent will get the money but then have to pay it back in 2021. For the parent that claims them in 2021, they will not receive money from July to December. However, they will get all of their money after they file their 2021 tax returns.
The money parents receive is an advance of what parents would receive when they go to file their 2021 tax returns. This means when your refund comes next year it will be less than in years past.
To learn more about the Child Tax Credit click here.