Parents of children born this year and those who have a new dependent in 2021 could receive an additional $1,400 on top of their tax refund in 2022 because of the American Rescue Plan.
The American Rescue Plan, a $1.9 trillion relief package passed in March, allocated $1,400 payments for eligible individuals and their dependent children. While most people have already received their full payment, those who had eligible children in 2021 can claim the Recovery Rebate Credit on their next tax return.
Economic Impact Payments, also known as stimulus checks, that were sent out in 2021 are advance payments of the Recovery Rebate Credit. Those who don't receive the full amount they're owed by December 31 can claim the remainder of the money when they file their taxes in 2022.
Since the 2021 Economic Impact Payments were based on a person's 2020 or 2019 return, any eligible dependents that came into the family in 2021 weren't included in the payment. Those who qualify for the Recovery Rebate Credit can claim the child on their 2021 tax return, which is filed in 2022.
Payments won't go out as a separate check, as they did in 2021. Those who are eligible for an additional payment as part of the American Rescue Plan will receive the credit as part of their 2021 refund.
Eligible dependents must be under 19 at the end of the year unless they're a student, and then they can be up to 24, or any age and permanently and totally disabled. The dependent must also be a child, brother, sister, foster child, stepbrother, stepsister, half-brother or half-sister, or a descendent of any of them.
However, to claim a dependent for the Recovery Rebate Credit a taxpayer must meet certain income requirements. Taxpayers are eligible for the full economic impact payment if they have an adjusted gross income under $75,000, or an income of $150,000 and are married and filing jointly.
Along with claiming the eligible dependent on a 2021 return, the person could be eligible for the Child Tax Credit, Tom Wheelwright, a CPA, told Newsweek.
The American Rescue Plan increased Child Tax Credit amounts from $2,000 for eligible children to $3,600 for children under 6 and $3,000 for children between 6 and 17. While many people received nearly half their allotted credit in monthly payments going back to July, some will claim their full credit amount when they file their taxes in 2022.
While many are hoping for another stimulus check in 2022, such payments don't look likely. A Change.org petition for monthly $2,000 stimulus checks has reached almost 3 million signatures, but lawmakers have all but taken new stimulus checks off the table.
It's not expected that Republicans would back another round of payments, given the opposition they had to the third round, and they would probably argue that new stimulus checks are even less necessary because of the increase in COVID-19 vaccinations and businesses reopening. It's also possible Democrats couldn't even get a unified caucus together on the matter, making another round of stimulus checks extremely unlikely.
Uncommon Knowledge
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