What are the Changes to the Child Tax Credit?
Nashua, NH Resident Looks for Clarification
Currently taxpayers can claim a tax credit of $2,000 per child under age seventeen. The American Rescue Plan raises that amount to $3,600 for children under age six and $3,000 for those between six and seventeen. This change means additional tax credit per child, and it allows those that are seventeen to now qualify as well. While the majority of families with minor children will qualify for this additional tax credit, there are income limits that will restrict others.
A Nashua resident was unsure how his family would be affected by changes to the child tax credit. Seeking answers, he contacted Merrimack Tax Associates.
Income Limitations for the Child Tax Credit
This tax break is only available to individuals earning below $75,000, heads of household with earnings of $125,000 or married couples filing jointly with a combined income below $150,000. Like the stimulus packages, this credit will begin to phase out as these income levels are met and exceeded. Eligibility for this tax credit is based on your 2019 or 2020 tax information, depending on the date that you file.
Those with income exceeding these limits, can still receive the $2,000 child tax credit as long as they meet the eligibility requirements. The income limited for this traditional credit is $200,000 for single filers or heads of household and $400,00 for married couples filing jointly.
Child Tax Credit Can Begin This Summer
Under this new tax law, monthly payments of $250 per child and $300 for those under six will begin as early as this summer. This money, considered an advance of the child tax credit, will run for six months. The rest of the credit can be claimed when filling your 2021 taxes.
The Nashua resident now has a better understanding of how the child tax credit will work for 2021. He is more confident with this knowledge, thanks to Merrimack Tax Associates.