The American Rescue Plan’s expansion of child tax-credits

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The American Rescue Plan’s expansion of child tax credits begins tomorrow with payments to an estimated 39-million families. We learned more about the tax credit – who it includes and how it’s distributed – from Tom Wheelwright, CPA, and CEO of WealthAbility. 

We started by asking who qualifies for the credit and what the process is to earn it.

Wheelwright explained that it goes up to 3,500 dollars per child under the age of six and 3,000 dollars for children between the ages of six and 18. Those whose income is too high to receive that level of qualification will receive 2,000 dollars.

We then asked how it changes based on those with single parents.

For those who want to receive the credit that are single parents, their income must be below 200,000 to receive the 2,000 dollar credit and lower to receive the 3,500 dollar credit. This credit is an annual credit that would receive monthly.

Wheelwright explained that this credit is not considered income when filing taxes, however, if you aren’t entitled to this tax credit, you will be asked to return it at the end of the year since this is an advanced payment for 2021. If you were originally eligible to earn the tax credit in 2020, but aren’t in 2021 then you will be asked to pay back the money you were given when you file your tax return.

The child tax credit portal on the IRS site allows parents to make changes prior to receiving the credit if they feel that they don’t qualify for the credit.

We asked if he felt that families should be able to navigate the tax credit portal themselves, or if they should ask someone.

“I think they should be able to figure it out on their own,” Wheelwright said.

Tom Wheelwright, CPA and CEO of WealthAbility.

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