IRS Sending Millions of Letters to Families Who Qualify for Monthly Child Tax Credits
The Internal Revenue Service (IRS) is sending millions of letters to families who qualify for monthly Child Tax Credits; payments start July 15. The American Rescue Plan Act, which was passed in March, enabled the expansion and advancement of the Child Tax Credit. The letters are being sent to families who may be eligible for an Economic Impact Payment based on information contained in their 2019 or 2020 federal income tax returns. Families who are qualified for Child Tax Credit payments in advance will also receive a second, tailored letter with an estimate of their monthly payment, which will begin on July 15. The IRS's goal is to make sure that no family loses out on these benefits, and the agency has been working closely with state tax agencies and others to identify families who might be eligible for this important benefit.
If You're Eligible For These Benefits
Individuals and families who haven't yet submitted their 2020 return – or their 2019 return – should do so as soon as possible to be eligible for any advance payments. By filing as soon as possible, the IRS will have their most up-to-date financial information, as well as important details regarding their qualified children. If you have children under age 17, and your income is below a certain level, the IRS can help you get your benefit payments as soon they're available.
Changes In The Child Tax Credit
In 2021, the American Rescue Plan increased the maximum Child Tax Credit to $3,600 for young children under the age of six and $3,000 for qualifying children aged six to seventeen. Prior to 2021, the credit could be valued up to $2,000 per eligible child, with 17-year-olds not being considered eligible.
Taxpayers who are eligible for the new maximum credit must have a modified adjusted gross income (AGI) according to their stipulation:
Singles must earn $75,000 or less
Heads of household must earn $112,500 or less
Married couples filing a joint return must earn $150,000 or less
Qualifying widows and widowers must earn $150,000 or less
The IRS will send families who may qualify for monthly Child Tax Credits an advance payment equal to five months of these credits if at least one qualifying child is younger than age six years old. These funds should arrive within four weeks after July 15. For 2021, the entire credit is totally refundable. This means that it is available to all qualified families, even if they paid no federal income tax. The refundable portion was formerly restricted at $1,400 per child. Though the Child Tax Credit funds may suffice in terms of expenses, it will not be enough to satisfy any tax debts you may have with the IRS. Any issues regarding back taxes or any other tax-related problems may be solved through one program; the IRS Fresh Start Program!
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