If you have children 17 or under, you might want to take a look at your bank account.
On Thursday, the Internal Revenue Service began making the first of six monthly payments to eligible families under the Expanded Child Tax Credit, which Congress approved as part of the US bailout earlier this year.
The amount of money families receive depends on the age of the children they have in their household. For children under six, the total credit increased from $ 2,000 to $ 3,600 per child. For those aged 6 to 17, the total credit increased to $ 3,000 per child, an increase of $ 1,000.
Families should expect to receive monthly checks totaling between $ 250 and $ 300 per child.
According to Ralph Thomas, CEO and executive director of the New Jersey Society of Certified Public Accountants, eligibility for the tax credit is dependent on income, noting that it is available to taxpayers “with a modified adjusted gross income of $ 75,000. or less for singles. , and $ 150,000 or less for married couples filing a joint return.
Thomas said that if a family files their taxes electronically and qualifies for the credit, the IRS sends that family half of their total eligible credit amount in six monthly direct deposit payments. For those who do not file electronically, a check will be mailed.
The tax credit extension, according to Thomas, is designed to help struggling families, but it’s important to remember that the extra money you receive is based on your paycheck which is reflected in your 2020 tax returns. or 2019. This means that some families benefiting from the credit may have to repay the government.
âThere could be a situation where if you’ve had a significant (salary) increase and you go over the threshold for the different categories, you have to pay it back,â Thomas said.
He noted that the tax credit expansion money is not considered taxable income, so it will not be taxed when you file your taxes next year.
Thomas said it is also important to remember “that there are people who do not file a tax return but are still eligible for the credit, they are well below the (income) threshold where you have to. file an income tax return.
He said in those cases the person should go to the IRS website and apply.
The expanded tax credit program is set to expire after a year, but the Biden administration wants to extend it until at least 2025, or just make it permanent.
According to the White House, the US Treasury Department estimates that $ 15 billion was distributed on July 15, impacting tens of millions of working families.
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