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Overhead shot capturing a heartwarming moment: a child's hand reaching out to touch a veteran's hand - Child Tax Credit.

Are You Missing Out On The Increased Child Tax Credit?

The American Rescue Plan Act of 2021, also known as the ARPA, injected much-needed relief into the U.S. economy during the pandemic. One of its hidden gems? A groundbreaking enhancement of the child tax credit, offering families a financial lifeline in 2021. But navigating the complexities of this temporary boost can feel like a maze. Fear not, parents! This guide will help you unlock the full potential of the child tax credit and ensure your family claims every dollar you deserve.

A Supercharged Credit for 2021 Only

The ARPA temporarily supercharged the child tax credit, boosting it from $2,000 to $3,000 per child aged 6 to 17 (a one-year extension from the usual 16-year limit). This translates to up to $1,500 per child in additional tax savings compared to previous years. But remember, this boost was only for 2021.

Claiming Your Due: Understanding Eligibility and Phaseouts

This credit is designed to support lower-income families, but it’s not a free-for-all. Your eligibility hinges on your modified adjusted gross income (MAGI). For example, if you’re married filing jointly and your MAGI is below $150,000, you’ll qualify for the full credit. However, the credit phases out gradually for higher incomes, so be sure to check the handy table below to see where you fall.

Pre-Payments: A Convenience with Hiccups

The ARPA also introduced monthly advance payments, delivering half the credit directly to parents from July to December 2021. While convenient, this system wasn’t flawless. The IRS relied on past tax filings to determine eligibility, leading to miss payments for some. If you received an advance payment you weren’t entitled to, don’t panic. You simply won’t owe it back.

Don’t Miss Out: Claim Your Credit Even If You Didn’t Get Pre-Payments

If you were eligible for the child tax credit but didn’t receive any pre-payments, don’t despair! You can still claim the entire credit on your 2021 tax return, even if you have no tax liability thanks to the credit’s refundable nature. Here are some reasons you might have missed out:

  • The IRS didn’t have your information: If your income in previous years was below the filing requirement, the IRS might not have had the data needed to determine your eligibility.
  • You didn’t file a tax return: Even if you weren’t required to file, doing so ensures you receive the credit.
  • You had a new child in 2021: If you welcomed a new addition to your family in 2021 and haven’t filed yet, you could be missing out!

Take Action: Secure Your Child Tax Credit Now!

The child tax credit is a valuable financial resource for many families. If you think you might qualify and didn’t receive the full amount, don’t wait! Here’s what you can do:

  • Review your eligibility: Use the information and table above to determine if you qualify for the credit.
  • Check your bank statements: Look for any advance payments you might have received.
  • File your 2021 tax return: Even if you didn’t file previously, doing so now will ensure you claim your full credit.
  • Contact a tax professional: If you have questions or need help navigating the process, consider seeking professional guidance.

Remember, the child tax credit is still available, waiting to be claimed. Don’t leave this valuable financial boost on the table! By taking action and understanding your eligibility, you can secure the resources your family needs to thrive.

JS Morlu LLC is a top-tier accounting firm based in Woodbridge, Virginia, with a team of highly experienced and qualified CPAs and business advisors. We are dedicated to providing comprehensive accounting, tax, and business advisory services to clients throughout the Washington, D.C. Metro Area and the surrounding regions. With over a decade of experience, we have cultivated a deep understanding of our clients’ needs and aspirations. We recognize that our clients seek more than just value-added accounting services; they seek a trusted partner who can guide them towards achieving their business goals and personal financial well-being.
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