who have can expect a significant financial boost over the next 12 months thanks to the signed into law last month by President Joe Biden. The new law provides a substantial amount of financial assistance in order to help those suffering through the economic impact of the , including and . However, the expanded could be the piece of the new relief bill that provides the most help to families.
The more than nine out of 10 families with children will . Equally important, families who pay little or no will receive the full amount they qualify for, a change from how the CTC had worked in the past, where lower-income families were excluded from the entire amount they were due.mean
So how is the new CTC different, who is, and can parents who share joint custody of a child each get money this year? We have answers, below. Plus, here is more on the , and .
Will parents sharing joint custody of a child each get a payment?
With the, parents who aren’t married but share joint custody of a child if they alternate years claiming the child on their taxes. With the new bill, Congress worked to close off that loophole for the third stimulus checks being sent out now.
Can parents who share custody of a child take advantage of a similar loophole with the new temporary tax credit? No, said Elaine Maag, a principal research associate with the nonpartisan Tax Policy Center. Only one person can claim the credit for a given child, Maag told us. And if you incorrectly claim a child this year, you may have to repay all or part of the payment next year.
Repaying any CTC overpayment is a departure from how the stimulus checks were handled. Typically, if you received an overpayment, you don’t need to send it back. (Here are situations where you’d need to.)
Can CTC payments be garnished to pay past-due child support?
According to the Congressional Research Service — Congress’ public policy research institute — the new law exempts the periodic child tax credit payments going out this year from offset for past-due child support. However, the amount you claim as a credit on your 2021 tax returns in 2022 could be subject to offset, the Congressional service said, similar to how claimed as a could be .
How does the new CTC expansion work?
Before the changes this year with the American Rescue Plan, eligible families could claim a tax credit for theirwhen they filed their taxes. The credit would reduce the amount of taxes they owed. That payment rule, however, excluded lower-income families who didn’t owe federal taxes and wouldn’t benefit from a tax saving with the credit.
With the new law, the credit is “fully refundable,” so qualifying families will receive the full dollar amount even if they don’t owe income taxes. Families will receive half the credit this year through period payments starting as soon as July and the second half of the credit in 2022 when they file their 2021 taxes during next year’s tax season. If, instead, you’d rather get one check, the IRS will let you choose to receive the full payment next year when you file. Here are more details on.
Who qualifies for the child tax credit?
The American Rescue Plan temporarily expands the CTC from $2,000 per child 16 years old and younger to $3,600 for children age 5 and younger and to $3,000 for children age 17 and younger.
The temporary expansion also makes the credit available to families in all US territories. Previously, the refundable credit was available to families in Guam, the Virgin Islands, the Northern Mariana Islands and Puerto Rico.
How much can families receive in 2021 and 2022?
Over 90% of all families with children — from lowest to highest qualifying incomes — will receive an average benefit of $4,380, according to the Tax Policy Center. Half the amount will go out this year periodically, starting this summer in roughly equivalent payments, and the second half next year when you file your taxes.
For more information on other funding, here’s how to, how to and what we know about a possible .