AMERICANS with children born this year can qualify for up to $3,600 in payments from the federal government through the enhanced child tax credit.
The child tax credit offers families anywhere from $250 to $300 per dependent under 17, and the IRS is telling families that newborns qualify as well.
Since the credit is based off of a family’s 2020 tax returns, however, parents of newborns or those who have adopted a child this year are asked to consider their options.
Some parents who had children earlier in the year should have signed up immediately for the tax credit, which would have bestowed upon any families with dependents under 6 a monthly $300 check.
However, others who gave birth later in the year are asked to consider if it’s worth it to sign up – or just wait until tax day 2022.
The credit is an advance on the child tax credit that parents would qualify for regardless when doing their 2021 taxes this coming April.
That means some families might want to forgo applying for a tax credit this late in the game in order to receive a lump sum payment upon submission of their taxes.
“We are so close to the end of the year at this point. There’s only one or two more payments that would be coming,” said Elizabeth Connolly, a partner at the accounting firm Connolly Steele & Co.
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“I would not recommend at this time that any new babies get added to the system,” she said regarding the monthly payment system.
“Some people better appreciate having the money all at once instead of getting it a little bit at a time.”
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But Connolly warns this is just if families can make ends meet without the additional payments.
“The reason they’re setting it up this way is for folks who really are having a tough time and need this additional monthly assistance just to make ends meet differently and to feel less under stress.”
Born out of the American Rescue Plan from the pandemic, the child tax credit not only offers families $3,600 lump sum payments but it also offers famlies with dependents between 6 and 17 a credit worth up to $2,000.
About 39 million American families received monthly checks since July, which will go on through the end of the year.