In the wake of the ongoing economic recovery efforts from the pandemic, the IRS has introduced several relief measures to help support American families.
Among the most talked-about provisions are the $3,600 Child Tax Credit (CTC) and the $1,400 per person payments. These initiatives are designed to provide financial relief to individuals and families, but who exactly qualifies, and how do these payments work? Let’s break down the details.
What is the $3,600 Child Tax Credit (CTC)?
The Child Tax Credit (CTC) is a benefit that provides financial relief to families with children under the age of 18. As part of the American Rescue Plan, the IRS increased the standard amount for this tax year. Here’s how it works:
- For children under 6 years old, the CTC is $3,600 per child.
- For children between 6 and 17 years old, the CTC is $3,000 per child.
This credit is aimed at reducing the financial burden on families and improving child well-being, especially during challenging times. Additionally, the credit is fully refundable, which means that even if a family has little or no tax liability, they could still receive the full amount.
How Does the $1,400 Per Person Payment Work?
The $1,400 per person payment is a direct stimulus check issued to eligible Americans under the American Rescue Plan. This payment is designed to provide immediate relief to individuals who meet specific eligibility requirements. The $1,400 payment is provided for each eligible individual, including dependents of all ages, such as college students and elderly relatives. This is an important update from previous stimulus payments, which typically only covered dependents under the age of 17.
Eligibility for the $3,600 CTC and $1,400 Payments
Child Tax Credit (CTC) Eligibility
To qualify for the $3,600 Child Tax Credit, families must meet certain income and filing requirements. Here are the general eligibility criteria:
- Residency: The child must be a U.S. citizen, national, or resident alien.
- Age Requirement: The child must be under the age of 18 at the end of the tax year.
- Income Limits:
- For single filers, the full $3,600 CTC is available if their adjusted gross income (AGI) is $75,000 or less.
- For married couples filing jointly, the full amount is available if their AGI is $150,000 or less.
- For heads of household, the income limit is $112,500.
- Phase-Out: The amount of the CTC begins to phase out for individuals with higher incomes, meaning that families earning above the thresholds will see their CTC gradually reduced.
$1,400 Per Person Payment Eligibility
The $1,400 stimulus payments are aimed at providing immediate relief to those struggling financially. Here’s who qualifies for the $1,400 direct payment:
- Single Filers: Individuals with an AGI of $75,000 or less.
- Married Couples Filing Jointly: Couples with an AGI of $150,000 or less.
- Heads of Household: Individuals with an AGI of $112,500 or less.
The $1,400 payment also applies to dependents, including college students, elderly parents, and individuals with disabilities. If your dependents are eligible, you’ll receive the $1,400 payment for each of them, in addition to your own.
Income Phase-Out for $1,400 Payments
Similar to the CTC, the $1,400 payment will begin to phase out for individuals who earn more than the above income limits. The payments will completely phase out for:
- Single Filers earning over $80,000.
- Married Couples Filing Jointly earning over $160,000.
- Heads of Household earning over $120,000.
How to Receive the Payments
For both the $3,600 Child Tax Credit and the $1,400 per person payments, the IRS is sending payments automatically to eligible individuals, so long as they have filed taxes recently (either in 2020 or 2019). If you haven’t filed your taxes yet, it’s crucial to do so to ensure you receive the credits and payments you’re eligible for.
The $3,600 Child Tax Credit is being distributed in monthly installments, with payments starting in July 2021. These payments are divided into 12 monthly payments of up to $300 per child for children under 6, and up to $250 per child for children aged 6 to 17. Families can opt to receive the full credit as a lump sum when filing their taxes, instead of monthly payments.
The $1,400 per person payment is generally sent as a direct deposit or paper check, depending on your preference and prior IRS filings.
Important Considerations
- Non-Filers: If you haven’t filed taxes recently or are not required to file, you may still be eligible for these payments. The IRS has an online portal to help you register for the Child Tax Credit and stimulus payments.
- Changes in Circumstances: If your income, filing status, or number of dependents has changed, the IRS will consider these changes when determining your eligibility and payment amount.
The IRS’ $3,600 Child Tax Credit and $1,400 per person payment provide significant relief to many families across the country. To ensure you qualify, it’s important to understand the eligibility requirements, including income thresholds and dependent qualifications. By staying informed and filing taxes on time, families can receive these much-needed financial benefits.
Be sure to check the IRS website or consult a tax professional for specific questions about your eligibility and how to claim these payments.
