There have been several stimulus payments made to many Americans this past year. Now, beyond that, we can expect to start seeing a change in the way the IRS gives you the child tax credit. Many people are confused at what this means for them and their finances. Mecham Dicus & Company is here to talk about the new child tax credit payments, when they start and what they mean for their taxes.
How Does the New Child Tax Credit Work?
In the past, the child tax credit has been $2,000 per child under the age of 18 in your home. Under the new child tax credit, parents that have children can expect to get $3,600 for every child that is under the age of 6 and $3,000 for every child between the age of 6 and 17 years old. Parents used to see this credit solely on their taxes the following year, but starting in 2021, payments are going to be made before taxes are filed in 2022.
When Parents Will Receive Child Tax Credit Payments
Starting on July 15, 2021, the IRS has announced that they will start sending out payments to parents that have children that qualify them for the child tax credit. Parents with children under 6 years old will receive $300 per child monthly, and those with children between 6 and 17 will receive $250 per child, monthly. They will be sent to families via direct deposit, checks and debit cards.
Is Everyone Eligible for Child Tax Credit?
To get the full amount of the payments, you have to qualify financially. Following are the qualifications that parents must meet.
– Those filing as single or married filing separately and make up to $75,000 a year
– Those married filing jointly or a parent filing as a surviving spouse who earned up to $150,000 a year
– Parents who file as the head of a household and make up to $112,500 a year
Will the Child Tax Credit Affect 2021 Taxes?
This new change has left Americans wondering what this is going to mean for their taxes when they file in 2022. All the money that you receive in these payments will be reconciled next year when you file your taxes. You may get more money in your refund depending on the information that you file in your taxes. If there has been an overpayment, you will be responsible to pay it back.
Tax Preparation, Filing, Planning, Bookkeeping & More in Salt Lake City, St. George, West Valley City, Provo, Orem, West Jordan & Greater Cedar City, Utah
It can be difficult to keep all the changes that are being made straight. There has been a significant amount of money dispersed to the American people over the past 14 months. If you have any questions about what this means for your finances and your taxes, you can rely on Mecham Dicus & Company to answer your questions. We can help you sort out your tax information and prepare your taxes for you. Call us today!