IRS OVERVIEW AMERICAN RESCUE PLAN

IRS overview american rescue plan. Prior to taxable year 2021, the child tax credit was worth $2000 per eligible child. The new law increases it to as much as $3000 per child for dependents ages 6 through 17, and $3600 for dependents ages 5 and older. The maximum credit is available to taxpayers with a modified AGI of $75,000 for singles, $112,000 or less for heads of households and, $150,000 or less for married couples filing a joint return and qualified widows and widowers. Above these income thresholds, the extra amount above the original $2000 credit—either $1000 or $1600 per child–is reduced by $50 for every $1000 in modified AGI. Also, the credit is fully refundable for 2021. Before this year, the refundable portion was limited to $1000 per child. IRS overview american rescue plan.

Advance child care tax credit payments. From July through December 2021, up to half the credit will be advanced to eligible families by Treasury and the IRS. The advance payments will be estimated from their 2020 return, or if not available, then 2018 return. For that reason, the IRS urges families to file their 2020 return as soon as possible. This includes many low and moderate income families who don’t normally file returns. Often, those families will qualify for an Economic Impact Payment or tax benefits, such as the EITC. This year, taxpayers have until May 17, 2021, to file a return. TO speed delivery of any refund, be sure to file electronically and choose direct deposit. Doing so will also ensure quick delivery of the Advance Child Tax Credit payments to eligible taxpayers, later this year. In the next few weeks, eligible families can choose to decline receiving the advance payments. Likewise, families will also be able to notify Treasury and the IRS of changes to their income, filing status or number of qualifying children. Details will be available soon. You can also go to the IRS website for more information, IRS.GOV