Do you hear that sound? It’s bells and it’s because the IRS has just announced a new tax refund that will alleviate the economic situation of many families around the country. It’s called the Child Tax Credit, and it’s a measure that seeks to help families financially in raising their children, but how do you apply for this refund? Here’s everything you need to know.
What is this credit?
As we have said before, it is called the Child Tax Credit, and it is a tax aid specially designed for families with children (as its name indicates). This aid will depend on the financial situation in which your family unit is, and it will have an impact in two possible ways: the first, it will reduce the amount of taxes you must pay (that is, reducing, for example, essential taxes), the second possibility is receiving a direct refund (and this will be the case even if your tax obligation is zero)
How much will I receive?
The maximum amount of money that each citizen can receive per child will be $3,600, note that for you to be eligible for this payment they will take into account three essential factors: first, your annual income, second, the state in which you receive it and third, the number of dependent persons in your family unit. (Don’t be scared by this term, the IRS understands children as dependent persons)
Who is eligible for this benefit?
There are a number of requirements that will determine whether or not you can receive this benefit:
- Dependency: the child for whom you claim the money must be claimed as a dependent on your tax return. This means that he or she cannot have worked or have his or her own tax return.
- Residence: at least half of the tax year he or she must have lived with you in your home.
- He or she must be an immediate family member: a child, stepchild, sibling, or grandchild.
- You must have covered at least 50% of the child’s support expenses (this is because in many states, one parent “skips” child support payments when they are separated)
- The minor must have a valid SNN (Social Security Number).
Be careful! You will not receive the payment, or you will receive a smaller amount if your family’s joint return (for married couples) exceeds $400,000 and for single people, $200,000. For every $1,000 over these limits, the credit will be reduced by $50.
How do I apply for this credit?
You already know that tax season starts in January, and the IRS recommends speeding up the process so that when you file your return electronically (it’s much easier this way) you select direct deposit as your refund method, and, by following these two simple steps, the money will be in your account in an average of 21 days from the day you file it.
Is it cumulative with other credits?
Yes, and there are three other types of credit that can benefit your family: the credit for expenses and care of dependent children, the earned income tax credit (EITC) and the recovery rebate credit.
In addition to this, parents of children born, adopted or received in foster care can request a recovery rebate credit (up to $1,400) for each dependent child.
It may not be a lot of money, but for families whose economic situation is not very friendly or who are having trouble making ends meet… this refund is a small light at the end of the tunnel. So, if you qualify, apply for this payment!