While the Child Tax Credit has been around for some time, this year it will be expanded.
The change is coming soon, but what exactly does that mean for most parents?
First, the Child Tax Credit has only been expanded for 2021, though Jeff Schneider, from Schneider Accounting & Tax Inc. in La Crosse, said they could extend this credit.
Schneider said the tax credit for a dependent under 17 was $2,000 but will change to $3,600 for a child aged 5 and under, and $3,000 for a child aged 6-17.
“You may note that, typically, if a dependent is 17, they don’t qualify for the child tax credit,” Schneider told the Z93 Morning Buzz recently. “But, for this year, if they are 17, they do qualify for that tax credit.”
Another difference is, of course, sending out checks.
The IRS will be “looking back at the most recently processed tax return,” Schneider said. “They will estimate out, based on your income, an advance payment. Starting July 15, they will be sending out monthly payments for one half of the child tax credit of what you would receive.
“So, if you have a dependent that is 5 years old, starting in July, you’d get monthly payments of $300 going through the end of the year. The second half of that, you’d be taking as a credit on your 2021 tax return.”
Trying to predict where this goes in the future — extending this plan, going back to how it was or something else — is kind of impossible.
“They are changing these tax rules, almost daily and weekly, so it is possible that they may extend this into future years,” Schneider said. “It may be something we need to get used to in the future, as well.”
The IRS website will have a portal for any changes parents need to make in regards to dependents, income or marital status because these credits are based on income.
Schneider says they advise their clients to go on and update everything to make sure that they’re receiving what they should.
For more information, visit the IRS website.