I am going to try to do this without a TLDR tag. I am often told I write too much. Thanks to those that read it all normally, but this one is for my skimmers. On top of the stimulus payments coming, there is more.
More money in the pipeline if you have kids.
Aside from the $1400/person, there is more coming through monthly payments to people with kids.
The new Child Tax Credit, the basics.
- It is $3000/3600 (age dependent) instead of $2000
- It is fully refundable.
- It is being paid in advance in 2021 (typically you could get this credit in 2022 when you file your tax return for 2021)…. oops, I just got wordy.
- It includes children aged 17 and under.
- It is only for 2021.
|Amount||$3000/3600 (age dependent)||$2000/500 (age dependent)|
|How is it paid?||In advance. Beginning in July, broken down into monthly payments from the IRS (but only part of it)||In 2022 when you file your 2021 tax return, part of if (see refundable amount below)|
|How much monthly?||Only 1/2 of what you qualify for, divided by 6. The rest will come in 2022 when you file your tax return.|
Important Note: this is only a “proposed schedule”. The law says “as frequent as monthly”. That gives the IRS wiggle room in case it doesn’t happen monthly
|Refundable||Yes, all of it.||Not all of it. If you have no tax to “reduce”, you ge nada. If the amount you qualify for exceed the tax owed, only $1400 per child could be “refunded”. The remainder would just reduce tax liability.|
|Example||If you qualify for full $3000, you will get $1500 in advance, divided by 6. $250/mo|
|Which kids?||17 and underr||16 and under|
|1st Income limit before the amount starts to get reduced.||$75,000 (single)|
$150,000 (married filing jointly)
$400,000 (married filing jointly)
|If you make more than the 1st income limit.||The amount is reduced by $50 for each $1000 above the 1st income limit.|
|What is the max income limit?||$95,000 (single)|
$170,000 (married filing jointly)
|What is it based off of?|
|If you make too much…||You still aren’t left out —>||You can still claim normal amount of 2k per child on your 2022 (for tax year 2021)|
|Where you live.||Includes U.S. territories and Puerto Rico|
|Employment||If you have no income, you can still qualify.||Need to make more than $2500/year.|
There will be a portal.
The IRS is supposed to setup a system to handle all of these payments and opt out. Note this payment can affect your refund amount next year, because you are taking half upfront. Also, IF you make significantly much more than anticipated, it could swing to an owing them situation.
Did I do good at brief?
I did my best. There are always slightly different circumstances where the above is shifted, it’s up to the IRS. We will write up some more details and of course it’s up for discussion in our live area and forum: