Child Care Tax Credit?

What is a child care tax credit?

Typically a child tax care credit is a credit you receive per child on your individual income tax return during the filing of your tax return. Under the current tax regulations (2020), you should receive a credit on your return of $2,000 per child under the age of 18. 

What is the change?

During the passing of the third stimulus package the child tax care credit increased to $3,600 for children under the age of 6 and $3,000 for children between the ages of 6 and 17. If you qualify, you should be receiving half of the total credit divided into monthly payments made from July to December. This should be $300 per month for children under the age of 6 and $250 for children between the ages of 6 and 17.

How do you opt out of receiving the payment early?

You can elect to not receive the payments early and just receive the larger credit on your tax return. To do so please follow the instructions at the following IRS link:

https://www.irs.gov/credits-deductions/child-tax-credit-update-portal

What should I do if I did not file a tax return?

If you have not filed a tax return, you may not be enrolled to receive the monthly payments. To sign up please follow the instructions at the following IRS link: 

https://www.irs.gov/credits-deductions/child-tax-credit-non-filer-sign-up-tool

Tax Planning Notes

If you are eligible and receive the prepayments you will not be receiving as large of a credit on your individual tax return This means your tax return could change by $500 per child for each child between 6-17 years of age and/or $200 per child under the age of 6. If you have a unique situation or further questions please contact us at michael@accountingpersonalized.com.