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What is the expiring child tax credit and how does it affect your payment?

HOW much you receive in child allowances, if any, depends on your income.

In 2021, the American Rescue Act child tax credit was temporarily increased to a maximum of $3,600.

If the child tax credit is not renewed in 2021, it would reset to $2,000

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If the child tax credit is not renewed in 2021, it would reset to $2,000

While eligible Americans can claim the remaining half of those payments on their tax returns, the Extended Child Tax Credit has expired.

That means if Congress doesn’t extend the expanded tax credit soon, there will be some changes compared to this next tax season.

Below we explain the income limits and how the exit works.

Income limits for child allowances in 2021

In 2021, couples qualified for the full payments if they earned less than $150.00, and single parents who register as heads of household were required to earn less than $112,500.

But there have been exits – one of which occurs after income exceeds those amounts.

For example, every $1,000 above these thresholds would reduce your child tax credit by $50.

With this exit, the credits would not drop below $2,000 unless the couples’ incomes reached $400,000 or $200,000 for all other filing statuses.

In the event income exceeds this level, the second exit would kick in – meaning the $50 cut continues for every $1,000 above.

This could eventually exclude you from claiming the child tax credit in 2021.

Income thresholds for child allowances before 2021

According to the current status, the child allowance should return to the level it had before the temporary expansion under the Covid Relief Act.

This would result in the child tax credit going down to a maximum of $2,000 per child and no more monthly payments.

Prior to 2021, the $2,000 child tax credit began to be phased out if the joint applicant’s income was $400,000 or more and $200,000 for all other applicants.

However, keep in mind that Congress could make changes throughout the year, as it did in 2021.

However, a deal to expand the child tax credit doesn’t seem close, as West Virginia Sen. Joe Manchin has not only declined to support expanding the benefit, but also other key measures on President Joe Biden’s agenda for better development.

To learn more about the child tax credit, here are two reasons why you may need to return your child tax credit or have it seized by the IRS.

When it comes to filing, tax expert Ahad Ali gave The Sun 12 tips on how best to prepare.

Also, here are five important documents you need to claim up to $22,503 from the IRS.

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https://www.the-sun.com/money/4821479/child-tax-credit-phase-out-reduce-explained/ What is the expiring child tax credit and how does it affect your payment?

Caroline Bleakley

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