The United States Government will distribute, from next July 15, up to $ 300 a month in a tax credit for each minor child to help some 39 million households to alleviate the impact of the COVID-19 pandemic, as announced on Monday the White House.
This measure is part of the economic relief package enacted in February by President Joe Biden and "provides fiscal relief to working middle-class families with children in distress," according to the statement.
The Advance Child Tax Credit program increases the existing tax benefit from $ 2,000 to $ 3,600 for younger children and 3,000 for older children, for tax year 2021.
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"For working families with children, this tax cut sends a clear message: Help is here," President Biden declared Monday.
How does it work?
Most parents know that when they file their taxes they get a child tax credit, that is, a deduction for each child.
But this year they will be able to opt for an advance of that money without waiting for next year through a monthly payment.
The aid checks will be an advance of half of what you would normally be entitled to receive.
Who is eligible?
Biden estimates that "about 90% of families with children will automatically get this new tax break."
To qualify for this benefit, the children must be children, brothers, stepchildren, adopted children, half brothers, stepbrothers or descendants, such as the grandson, nephew or cousin of the incumbent adult in the household.
Married parents filing joint returns, as well as widows or widowers with incomes less than $ 150,000 are eligible for full refunds, according to the IRS.
The amounts will be reduced for couples with incomes above that amount.
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Parents who do not fall into the married or widowed categories can earn up to $ 112,500 for heads of household and $ 75,000 for all other individual taxpayers before benefit is reduced.
People who do not earn enough money to pay income taxes can also expect to receive more money this year.
Under the new tax credit, low-income parents will no longer be subject to a portion of the credit as they currently do, and poorer families, who generally don't benefit from it at all, will also qualify for the full amount.
What if I have dependent children over the age of 18?
Another extension of government assistance with the Biden Administration extends a credit of $ 500 for dependent children over 18 years of age, who were excluded from the previous program.
How much does the aid amount to?
In this case, eligible families choose up to $ 300 per month for each child under 6 years old and up to $ 250 per month for each child between 6 and 17 years old.
Therefore, a family with three children ages 5, 7 and 16 could receive an additional $ 800 per month in their bank account until the second half of the year.
The credit disappears once the young person turns 18.
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Amounts could be less depending on parents' income and the IRS said final payment amounts will be determined by 2020 tax returns (or 2019 filings if 2020 documents have not been processed on time) and urges those who have not yet submitted it to do so as soon as possible to make sure they are eligible for the proper amount.
When will the money begin to be distributed?
Deposits will be made from July to December.
Payments representing the first half of 2020 will be provided thereafter in a lump sum.
The money will be automatically deposited into the accounts the IRS has on file, with no further action required.
Can I choose not to participate?
Yes. The IRS communicated that eligible taxpayers who do not want the advance payments and instead would like to keep the entire child tax credit until next year will be able to reject the checks.
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"Taxpayers will also have the opportunity to update information on changes in their income, marital status for tax return purposes or the number of children," the agency reported, adding that an online portal will be available sometime before 15 December. July.
With information from NPR.
