A huge chunk of being a breadwinner is ensuring your family is properly taken care of. That includes paying the bills, taxes, utilities, and food, among other financial responsibilities. However, it might be difficult to deal with all of these financial burdens if you barely make enough to cover them. Have you heard about the child tax credit? It’s a benefit that can really cushion these responsibilities. This article explores the child tax credit (CTC), its benefits, and how to qualify in the US.
What is Child Tax Credit?
The CTC is a tax benefit granted to American taxpayers for each of their qualifying dependent children. It is fully funded by the Internal Revenue Service (IRS), which distributes the credit to eligible taxpayers monthly.
The child Tax Credit is designed to support American breadwinners to cover the costs of raising their families and saving for their children. This includes paying for food, clothes, school fees, and even paying down credit cards. Other families can use the tax credit to cover costs such as a mortgage, utilities, or payments for a car.
Can You Receive Other Benefits Alongside it?
You can also receive other federal benefits alongside the Child Tax Credit. These benefits include Medicaid, Public Housing, Section 8, WIC, Temporary Assistance Needy Families (TANF), Supplemental Nutritional Assistance Program (SNAP), Social Security Disability Insurance (SSDI), and Special Supplemental Nutrition Program for Women, Infants, and Children (WIC).
Who Qualifies for the Child Tax Credit?
Generally, people with kids qualify for the credit. However, the tax credit will be provided if the dependent:
- Is a child or children below the age of 18 at the end of the year.
- Is your child, stepchild, eligible foster child, sibling, step-sibling, half-sibling, or grandchild.
- Has lived with you for more than a year.
- Provides no more than half of their own financial support during the year.
- Has been a US citizen, national, or lawful resident.
- Has not filed a joint return with their spouse for the tax year.
As a breadwinner, you qualify for the full amount of the tax returns if:
- Your annual income is less than $150,000 if you’re married and filing a joint return or if you’re filing as a widower or widow.
- Your annual income is less than $112,500 if you file as the household head.
- Your annual income is less than $75,000 if you’re single or filing a separate return when married.
Parents and guardians with higher incomes may not be eligible for the full monthly payments. However, they may be eligible to claim a partial credit.
How Much is the CTC?
If your family is eligible for the tax credit, you will receive the full amount of the following:
- $3,600 for each child under the age of 6
- $3,000 for each child from 6 to 17
To get these payments to families sooner, the IRS will send half their 2021 Child Tax Credit as monthly payments of $300 per child under age 6 and $250 per child between 6 and 17.
Noticeably, you can receive the payments in lump sums instead of monthly payments. Check with the IRS’s Tax Credit Update Portal for more information.
How to Apply for the Child Tax Credit
No application is needed to claim the tax credit. All you need to do is file your taxes using the guidelines provided on Schedule 8812 (Form 1040) to determine your child’s tax credits.
Based on the information provided, the IRS will determine if you qualify and automatically enroll you for the monthly payments.
You can also use the GetCTC tool to claim your Child Tax Credit in 2022 before November 15th. The service takes 15 minutes to complete, and your tax documents are not required.
Where will the IRS Send the Tax Credit?
The IRS will send the advance child tax credit payments to the bank account provided on your file. A check will be mailed to your home address if you don’t have bank account information.
When you receive electronic payments, the deposit will be labeled CHILDCTC. You also can give the IRS a new bank account where the credit will be paid. Check with the IRS’s Tax Credit Update Portal.
Summary
The Child Tax Credit (CTC) is another benefit to low-income earners to support low-income families and plan for their financial future. It can be used to cover the costs of living, including paying for food, clothes, school fees, mortgage, or even purchasing a car. Thus, it is essential to claim the credit, if your child or ward is eligible, as it would go a long way in taking care of them. With our unique guide, you can go ahead and apply for the CTC.
