What is child tax credit?
Child tax credit is part of the America rescue plan 2021, the largest child tax credit in history ( $2000-$3000 per child over the age of 6) and ($3000-$3600 per child below the age of 6) all to give working parents help in raising their children. The program is also inclusive as it makes space for 18 year olds and college students from ages 19-24. In this article we shall see Will college students get the child tax credit?
Who is qualified to receive the child tax credit?
Most working class families with children under 6 are the most eligible.
But that doesn’t mean children over 6 are not eligible.
Income threshold to receive the child tax credit
- Single filer- A gross income of $75,000 or lower
- Married jointly- A gross joint income of $150,000 or lower
- Married but separately (head of household)- A gross income of $112,500 or lower
Gross income includes income in the form of money, goods, property that includes tax and excludes social benefits.
Being within the income threshold qualifies you for a child tax credit of $3600 that is $300 per month for children under the age of 6 and $3000 that is $250 per month for children who are older than the age of 6.
Are college students eligible?
Families with children of 18 years or older do not qualify but families with children or dependents of 18 year olds or 19-24 year olds that are full time college students qualify and are given a credit of $500 one time for each child.
Those with a higher income threshold than the stated are also eligible, just that their credit begins to phase out by $50 for every $1000 increase above the threshold.
For non-filers (those whose gross income does not grant them to pay tax), they can receive the credit by filing the non-filer status and applying on the IRS portal. But filers that paid their tax return for the previous year do not need to apply, they just get a direct deposit into their bank account (if that is how they choose) or a check. They are paid the half of their eligible payments from July 15- December and receive the other half when they file their tax return the next year.
Procedure of receiving the tax
• You will have to fill a file of tax return and claim the child tax credit on return.
• Parents who get their refunds from the IRS through direct deposit will get the payment in their bank account.
• To those that filled or Signed with non filers will receive a stimulus check from the IRS will get the child tax credit automatically.
Required documents to get a child tax credit
• Parents/ Guardian must be a qualified tax payer.
• Birth certificate or other official documents that shows the relationship with the child claimed.
• For, Adopted children, there will be a proof the children was lawfully adopted by you or a relative of you.
Smart ways to use your tax refunds
Here are a few ways to do so after taking care of your basic essentials.
Pay up your debt if you have any
Loans or credit debts are the debts with the highest interest rates and you can use your returns to pay for them. They might not be able to cover the full expense of your debt but can at least take some burden off your back.
Build up your emergency fund
Life is full of surprises and can take a turn you didn’t expect at any moment. Having an emergency fund handy when you need it can be lifesaving.
Invest
There are so many options on how you can invest your money. Stocks, bonds, real estate and the likes.
Conclusion
Child tax credit scheme are done on purpose to provide financial assistance for low income parents and their children. Roughly 90% of the children in the united state will benefit from the scheme.
So yes, colleges students do get the child credit tax.
Frequently asked questions
- Who is eligible for the child tax credit?
Parents who are residents of the U.S or who have resided for at least 6 months and have at least one child form 0-18 years or 19-24 years who are full time college students are eligible no matter their income bracket or filing status.
- When would the payment be sent?
The advance child tax credit would be disbursed July 15 and the first half would be paid in installments through December 15. The other half would be sent when 2021 tax returns are filed.
- How would the payment be sent?
As stated previously, direct deposit into your bank account if you have your bank account linked to your IRS portal and if not a check would be sent to you.
- Can I opt out of receiving the monthly payments?
Yes you can opt out of receiving the monthly payments through the IRS portal and choose to receive the full credit when you file your tax returns for the next year.
