Taxpayers Have To Pay Back Their Child Tax Credit
Since July, the IRS is began delivering monthly payments for the enhanced child credit. Some child credit applicants should be aware that they may be required to repay a portion of the monies at the start of the next tax year.
The enactment of the American Rescue Plan enables for periodic installment payments of the child tax credit to be made to qualifying taxpayers. Americans can receive up to $300 per month per child, but the IRS will estimate the child credit advance payments depending on the information they have on file for an individual, such as income, marital status, and the number and age of qualified children.
If the IRS has outdated information on an individual, the tax credit may be overpaid. This will need the individual who received the additional funds repaying any amounts that were not used. Receiving the advance payment could result in a lower refund or a higher tax payment for an individual the following tax season.
The IRS uses 2020 tax returns, or if they aren't available, 2019 returns, to calculate a taxpayer's overall tax credit amount for 2021. The maximum credit amount under the American Rescue Plan has been increased to $3,000 for children aged 6 to 17, and $3,600 for younger children. The remaining half would be claimed next year during tax season.
If a taxpayer's income goes up significantly from the income stated on a 2020 return, he or she may be hit with a tax bill. This may also result in a reduction in a person's credit limit or disqualification based on their earnings.
Resolve Your Tax Bills
No taxpayer in their right mind wants to be hit with that tax bill, especially if it tends to be a struggle to pay off. The tax credit will not be enough to satisfy any tax debts individuals and families may have with the IRS. But there is a new and improved relief program that consolidates many major relief programs into a one-size-fits-all assistance program. Any issues regarding back taxes, unfiled years, or any other tax-related problems may be solved through one program; the IRS Fresh Start Program!
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