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The IRS announced this week that it's sending letters to 36 million families who may qualify for the expanded child tax credit that will begin going out in mid-July.
Low- and middle-income parents can expect to receive $3,000 for every child ages 6 to 17 and $3,600 for every child under age 6 under the expanded child tax credit, which was authorized earlier this year by President Biden's coronavirus relief bill.
BIDEN'S PROPOSED 39.6% TAX HIKE WOULD HIT THESE INDIVIDUALS, FAMILIES
The expanded amounts are tapered off once income hits $75,000 for individuals and $150,000 for married couples.
The IRS is notifying families who may be eligible based on information they submitted to the agency on their 2020 federal income tax return, or 2019 return if they have not submitted for last year yet.
If families earn too much to qualify for the sweetened tax credits, they can still receive the $2,000 credit for their children if their income level is below $200,000 for individuals and $400,000 for married couples.
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Families will receive a monthly payment – roughly $250 to $300 per child – instead of an annual lump sum. Half of the credit will be paid out beginning July 15. From there, the IRS will deliver the monthly payments on the 15th of each month through December 2021.
The remaining half will be a credit toward next year's taxes. Any money left after covering taxes will be paid directly to families.
For instance, a family with a 10-year-old and a 4-year-old would be eligible for a credit of $6,600 if they earn less than $150,000. They would receive a credit of $550 per month through December, and then $3,300 when they file their taxes in 2022.
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Most recipients – about 80% – can expect to receive the money via direct deposit. The IRS will also deliver the money with paper checks or a prepaid debit card.
The IRS said 88% of all children living in the U.S., will qualify for the payments.
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