The White House has issued multiple stimulus checks to the population during the pandemic including the Child Tax Credit, which was implemented earlier this year. So what is the Child Tax Credit? Will the Child Tax Credit affect your tax return?
Let’s find out.
What is the Child Tax Credit?
Originally, you could get a tax credit of $2000 per qualifying dependent. This is different from a deduction, which is based on your income bracket. A credit reduces your tax bill. If you owe $1000 for taxes and have a $2000 tax credit, then you would be entitled to a refund of $1000.
The CTC was increased to $3600 per dependent when the American Rescue Plan was passed (this was the covid relief package).
If you qualified for the credit, you may have already begun receiving a monthly payment of up to $300 per child. This started in July and will end in December 2021.
Do I qualify?
If your modified adjusted gross income is less than the following amounts, then you qualify:
- Single: $75,000
- Head of Household: $112,500
- Married, filing jointly: $150,000
You also have to have provided at least half of the child’s support during the last year, and the child must have lived with you for at least half of the year. For further information about qualifications, check the IRS eligibility tool.
How much can I get?
If your child was under the age of 6 on 12/31/21, then you are eligible for up to $3600, which would have meant $300 monthly payments.
If your child was between the ages of 6-17 on 12/31/21, then you are eligible for up to $3000, which would have meant $250 monthly payments.
How is the monthly amount calculated?
Get ready for some quick math.
The CTC increased from $2000 to $3600.
Half of the CTC is used for these advance payments that have been arriving from July-December of 2021. Roughly $1500-1800 per child.
Divide that amount by 6 for each month that a payment went out (Jul, Aug, Sept, Oct, Nov, Dec).
This means the advance payments are generally $250 (1500 divided by 6) or $300 (1800 divided by 6) per child.
How will the Child Tax Credit affect your tax return?
As I mentioned earlier, this is a credit. It can make you eligible for a refund if it pays your entire tax bill.
Will I still get a tax refund in 2022?
If your tax credits or paid income taxes are sufficient to pay your tax bill, then yes.
How much of the Child Tax Credit do I have left?
The first question here is “Have you been receiving the advance CTC payments?”
If you opted out or if your answer is no, then your remaining Child Tax Credit will be up to $3,000 or $3,600 per child, depending on the age of the child.
However, If your answer is yes, then you need to determine how many payments you received. If you received all six payments, then your remaining tax credit is up to $1500 or $1800 depending on the age of the child.
Can I still opt out?
No. At the time of writing, the deadline for opting out of the final payment in December 2021 has passed.
Will we get advance payments in 2022?
Uncertain.
Can I claim my dog as a child?
I wish.
I hope this article will have answered many of your questions surrounding how the Child Tax credit will affect your tax return and you’re more prepared for the tax season ahead!
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