42 LONGISLANDPRESS.COM • AUGUST 2021
HOW THE NEW MONTHLY CHILD TAX CREDIT WORKS
We connected with Radha Seshagiri,
director of Public Policy and Systems
Change at SaverLive, a nonprofit that aims
to help people build financial security, to
find out how this Child Tax credit works.
Also, if you do not usually file a tax return,
you can visit the online tool the Internal
Revenue Service (IRS) recently unveiled
to help low-income families register for
monthly Child Tax Credit payments.
What is a tax credit, and how does it
work? A child tax credit is a benefit to
help families who are raising children.
It helps offset the costs of raising kids.
A refundable tax credit is one in which
you receive more than you owe in taxes.
For example: if you owe $3,000 in taxes
and have credits totaling $4,000, the
government owes you $1,000.
What is the Biden Child Tax Credit, and
how is it different from the $3,000 Child
Tax Credit (CTC)? The Child Tax Credit
has been around since 1997, but, like the
Earned Income Tax Credit, it used to be
distributed in a lump sum at the same
time as other tax refunds.The American
Rescue Plan, signed into law on March 11
under the Biden administration, includes
an expansion of the Child Tax Credit.
To get money to families sooner, the IRS
will send you half of your 2021 Child
Tax Credit this year, automatically; this
started in July. It will be broken up into
monthly payments, which means payments
of up to $300 per child under age
6 and $250 per child ages 6 to 17. You’ll get
the remainder of the credit when you file
your taxes in 2022. This is a temporary
one-year expansion of the CTC for your
2021 tax return (which you file in 2022).
Who qualifies for the Biden Tax Credit?
When will it start, and how long will it run?
Here’s who’s eligible:
● Any individual who earns less than
$75,000
● A head of household who earns less
than $112,500
● A couple that earns less than $150,000
and has dependent children
There is no minimum income requirement.
Children claimed for the CTC must
have a valid Social Security number. It is
important to dispel some myths about
people who are qualified. Many people
believe that because they don’t make
enough to file taxes, they don’t qualify.
This is not true. If you don’t typically
have to file tax returns, you have to take
some form of action with the IRS. The
White House website has a great FAQ
page on the credit and eligibility: Child-
TaxCredit.gov.
Are there other tax credits that can help
families, especially families at the poverty
level? People can qualify for credits
for several reasons. The Earned Income
Tax Credit, for example, is a significant
credit for lower-income workers between
the ages of 25-64, especially those with
children. The Savers Tax Credit is a credit
that lower-income workers may receive
for contributing to a qualified retirement
plan. The Child and Dependent Care Tax
Credit helps families with children offset
the cost of care. There are several more
available through the IRS.
This article first appeared in New York
Family.
FAMILY & EDUCATION
continued from page 41
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