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Though the Stimulus Checks Have Expired, This Important Tax Credit is Still Available

Bylima

Jan 5, 2024
Though the Stimulus Checks Have Expired, This Important Tax Credit is Still Available

The federal government provided $814 billion in financial relief and 476 million in direct payments during the COVID-19 pandemic. However, the last round of stimulus relief was distributed in March 2021, and no more checks have been issued since.

The American Rescue Plan Act offered qualifying parents an expanded Child Tax Credit, which gave them access to $3,000 for each child over the age of six and $3,600 for children under six, in addition to the direct payments that were made. Additionally, since 2021, this increased credit has not been accessible.

Even though it seems unlikely that you will receive any more stimulus payments shortly, you still have opportunities to receive free money from the government. For those who can qualify, there is still a valuable tax credit.

The end of the pandemic relief did not result in the elimination of this tax break.

Significant improvements to the Child Tax Credit were made by laws enacted to provide relief from COVID-19. The pandemic stimulus bills not only increased the amount of the tax credit, but they also made arrangements for half of it to be deposited directly into your bank account at a monthly rate of $250 or $300.

READ ALSO: Fourth Stimulus Check 2024: An Accurate Look at the IRS Stimulus This Year

This implied that you could obtain the credit that was due to you without having to wait to file your tax return. It appeared out of nowhere. But it’s no longer doing that. Fortunately, though, the Child Tax Credit did not vanish along with the expanded credit. The pre-pandemic original tax credit is still available, though it will only be available in smaller amounts and you will have to file a tax return and wait for the IRS to process it before receiving your money.

It’s Crucial to Keep in Mind That Part of the Money is Yours if You Became Accustomed to Receiving It Automatically or if You Were Unaware That You Could Get Credit Until the Pandemic.

The current Child Tax Credit offers up to $2,000 per qualifying dependent child, which is a generous amount considering the way tax credits work. This is a decrease from the $3,000 or $3,600 you received during COVID-19. Credits result in a dollar-for-dollar reduction in the amount of taxes you owe, as opposed to deductions, which only lower the amount of income you’re taxed on.

Let’s take the example of a $2,000 deduction. To determine your taxable income, you would simply deduct that $2,000 from your earnings; the $2,000 that you deducted would not be subject to taxation. Not paying taxes on your first $2,000 of income could save you as much as $440 if you were in the 22% tax bracket.

READ ALSOUpdate on the Stimulus Check: This Year, Americans in Five States Can Anticipate Payments

But that’s not what a credit does. Rather, it lowers your actual bill. Thus, you would only owe the IRS $3,000 if you had $5,000 in tax debt and claimed a $2,000 credit. Rather, it lowers your actual bill. Thus, you would only owe the IRS $3,000 if you had $5,000 in tax debt and claimed a $2,000 credit.

You should make sure you claim your credit because it can save you a lot of money, particularly now that the government isn’t supporting families and parents as much as it did during the peak of COVID-19.

Does the Child Tax Credit Apply to You?

To be eligible for the Child Tax Credit, you must fulfill several requirements. As an illustration:

  • At the end of the tax year, your child must be under the age of 17.
  • The child must be your dependent and have a particular relationship with you, such as being a sibling, half-sibling, foster child, child, stepchild, or decedent of those people.
  • In most cases, the child has to have lived with you for half the year or longer, and you have to have supported them for half of that time.
  • Your child must be a citizen, national, or resident alien of the United States and require a Social Security number.
  • You will also lose your eligibility for part or all of the credit if your modified adjusted gross income surpasses a certain threshold ($200,000 for individuals filing jointly with a spouse and $400,000 for others).

     

     

    Additionally, you may benefit from a partial refund of up to $1,600 if you do not owe the full $2,000 in taxes. This would imply that you truly receive a larger refund than what you originally paid the IRS. However, unless you owe at least that much in taxes, you are not eligible to claim the full $2,000. The most you could get back, if your tax bill is only $1,000, is the $1,600 refundable portion of the credit; you would lose out on the remaining $400.

Use the IRS’s interactive tool to see if you qualify for the tax credit before the official start of tax season to find out if you can claim this valuable credit. Try it out now, and if you qualify, make sure to file your taxes so you can receive the money you are due.

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