What to know about the new child tax credit
LEXINGTON, Ky. (WKYT) - Child tax credit payments are scheduled to begin July 15. The enhanced tax credit is a part of the American Rescue Plan, which was signed into law in March. Fiduciary retirement planner Josh Smith of Strategic Wealth Designers explains how the tax credit payments will work and what can be expected going forward.
“Around 39 million families will receive the enhanced child tax credit,” Smith says. “In order to qualify for the full amount of credit, filers must make less than $150,000 if filing jointly, $75,000 if filing alone, and less than $112,500 for those filing as “head of household.” The full credit is $3,600 for children under six and $3,000 for children between six and 17. Those making more than the specified incomes can still receive a partial credit of a lesser amount.”
Payments will be made automatically based on 2019 or 2020 federal income tax returns. The Child Tax Credit Update Portal through the IRS allows filers to update their direct deposit information. If the IRS does not have a filer’s bank account information, the first payment on July 15 will be sent via check in the mail.
“Right now, this additional payment is a one-off situation,” Smith. “Without anything changing, the maximum payments will go back to $2,000 next year. President Biden hopes to extend benefits through January 2026, and other Democratic leaders hope to make the changes more permanent. As is, payments will stop in January 2022.”
The payments are expected to bring more than four million children out of the poverty level. To see additional stories surrounding business and economic news for the Lexington area, visit https://www.WKYT.com/MoneyMatters/ and if you have a question for Josh send an email to email@example.com.
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