Households in the United States that received increased Child Tax Credit payments in 2021 will have to report that income this year. Because of income or family changes from the previous year, they may receive a lower or bigger tax refund in some situations. The impact on most taxpayers’ tax refunds, though, will be small.
You might have a lower tax refund
President Joe Biden signed the $1.9 trillion American Rescue Plan into law last year, which includes enhanced Child Tax Credit benefits. Eligible families might sign up for monthly CTC payments starting in the second half of 2021 as part of that package.
These payments represented a half-payment of the entire benefits. To obtain the second half of the benefit, families must file tax returns in 2021.
A change in income or family status (such as the birth of a new child) in 2021, as previously reported by GOBankingRates, might affect the amount of your return when you pay your taxes.
If your income increased to the point where the Child Tax Credit amount you may claim was lowered — or perhaps removed entirely — you could receive a smaller refund or even owe money.
New moms could get another payment in Child Tax Credit
Pregnant mothers will be allowed to claim the Child Tax Credit for children who haven’t been born if a group of Republican legislators gets their way. Sen. Steve Daines, R-Montana, and several of his colleagues are leading the campaign to assist pregnant parents with the cost of carrying a baby and planning for expenditures associated with the delivery and child-rearing.
The Child Tax Credit for Pregnant Moms Act is a supplement to the current Child Tax Credit. If a social security number is obtained at tax time, a taxpayer can claim the credit for the year before the birth, or for “the taxable year in which such child is miscarried or stillborn.”
In the latter case, an identifying number from a miscarriage or stillbirth certificate must be given. The tax credit would not be available if the pregnancy was terminated on purpose. There is an exception for pregnancy that puts the woman’s life in jeopardy, such as ectopic pregnancy, as long as both mother and child are saved.
Per Deseret News via MSN, if a child is conceived and born in the same year, the law includes a provision that allows certain families to obtain a double credit. According to the concept, if a baby is conceived in one year and born in another, the benefit is equalized by giving the mother two credits in the same year when the full pregnancy takes place in that year.