Confusion surrounds new child tax credit | heraldry
ANGOLA – Families started receiving money from the expanded child tax credit in July and for those who are eligible, they will receive another payment, either by direct deposit or by check, this Friday.
As part of the US bailout enacted by Congress and enacted by President Joe Biden in March, the child tax credit was increased in value and, instead of ensuring that families received the money in as part of their tax returns, they receive monthly deposits. until the end of this year.
While the program seems straightforward enough, some people are concerned that it will end up impacting their tax bills when they file their 2021 returns in 2022.
“My biggest concern is that I have heard conflicting information. At one point I heard that it was really just an advance on your tax return and if by any chance you make too much money you could end up owing money. money next spring. Like I said before, we are financially stable so we are putting this money aside just in case, ”said Vickie, Angola, who did not want her full name printed. “If it turns out that this is really ‘free money’ then we will likely make additional payments on our student loans …
Information from the Internal Revenue Service indicates that people may have to repay some or all of the monthly money if their income or tax status changes in 2021. Monthly checks are distributed based on 2020 income. a family’s income was expected to increase in 2021 to the level where the individual is expected to receive an early child tax credit, or not, while receiving all or part of a credit, then the money may have to be refunded at the time of imposition.
The American Rescue Plan has increased amounts going to families and expanded the program to include those with incomes so low that they owe no taxes. Benefits begin to disappear at incomes of $ 75,000 for individuals, $ 112,500 for heads of households and $ 150,000 for married couples. After this level, the money is reduced by $ 50 for every $ 1,000 of additional income, gradually increasing to $ 170,000. Families with incomes of no more than $ 200,000 for individuals and $ 400,000 for married couples can still receive the previous credit of $ 2,000.
In the past, eligible families received a credit when filing their taxes, either as a lump sum payment or as a credit against taxes owed. Now six months of payments are advanced monthly until the end of the year. A beneficiary receives the second half when he files his taxes. The credit is $ 3,600 per year for children under 6 and $ 3,000 for children 6 to 17 years old. Eligible families will receive $ 300 per month for each child under 6 and $ 250 per older child.
“If you receive a total amount of the child tax credit advance payments that exceeds the amount of the child tax credit that you can properly claim for your 2021 tax year, you may need to repay the child tax credit. IRS all or part of this overpayment, ”information said on the IRS website.
Area resident Amanda Zimmerman said when her first loan appeared in her bank account last month, it took her by surprise.
“I received the first one, of course, I was trying to understand where it came from. I had to call my tax specialists to stop it, ”she said.
People have the option of opting out of monthly checks. If people want to opt out or make other changes regarding the Child Tax Credit, they can do so at the following IRS website: bit.ly/2VF3NJO.
“I enjoy my taxing time. As a single mom, that’s money we use for vacations. Or catch up with whatever is needed. I don’t appreciate everything changing and then having to jump through hoops to keep it the same as it always has been. It should be an option, not a burden, ”she said.
Another couple from Steuben County, who did not want to be named because it would give a general idea of their income, received partial payments because their income was between the maximum for full payment and less than the maximum for no credit. anticipated.
“Fortunately, it didn’t really affect us at all,” said the mother of four.
Her husband said they weren’t going to spend the money in case their income changed and they ended up having to pay back the money.
Families received an average of $ 423 in July, the Associated Press reported; the Treasury Department estimates that 35.2 million families received payments in July.
A Fremont father-of-two, who is eligible for a monthly payment of $ 500, said he could see how the checks would benefit families based on his experience with his daughters’ preschool education and the need to pay for child care while he and his wife worked. before girls reach school age.
“I don’t care if I get the money over the rest of the year or all of it on my tax return. It all depends on the family situation, whether it helps them or not, which can always change, ”said the man, who did not want to be named due to the volatile nature of politics these days.
Some Democrats would like the additional child tax credit to become permanent, as do other countries – like Canada, Britain, Norway and others, which are said to be some 17 so-called rich countries – which are subsidizing the education of children for a large part of their population.
Republican Senator Mitt Romney of Utah had pushed for such a measure before the US bailout was promoted by the Biden administration. He proposed to return the child tax credit to $ 4,200 per year while eliminating other assistance programs.