You could receive a lower tax refund this year if you received the child tax credit

If you are hoping for a tax refund, you may end up with a very small amount or even owe money.

You generally get a federal tax refund when you have paid or withheld more than the amount you owe, based on taxable income.

The IRS subtracts the larger of the standard deductions from adjusted gross income to meet taxable income, but there are a few reasons why this income may be higher in 2021.

It should be remembered that the American Rescue Plan, signed by President Joe Biden in March, increased the 2021 child tax credit from $ 2,000 to $ 3,000 for each child 17 and under, and gave an additional $ 600 for each child under 6 years of age. .

Millions of families received half of that money up front, through monthly payments of $ 250 or $ 300., from July to December, which means that they will have a lower amortization at the time of the tax refund.

To better explain this situation, here’s an example: If you qualified for a $ 3,000 tax credit and received $ 1,500 upfront payments, you will claim the balance of $ 1,500 when you file a tax return.

That’s $ 500 less than the $ 2,000 credit received the previous year, assuming you have the same income.

Also, you may need to repay part of the anticipated tax credit if your 2021 adjusted gross income exceeds $ 75,000 for single parents or joint taxpayers with income above $ 150,000.

You may also like:

– If you received unemployment benefits in 2021 you will have to pay taxes on that money this year

– Social Security: monthly payments will have an increase of 5.9%

– United States labor experts recommend asking for a salary increase this end of the year

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