What Is The Advance Child Tax Credit?
The Advance Child Tax Credit (ACTC) is a form of government assistance that helps families with children reduce their tax liability. It is available to taxpayers who are eligible for the Child Tax Credit and have at least one qualifying child. The credit can be taken in advance, meaning it can be claimed before the end of the tax year. This can help reduce the amount of taxes owed and provide a much-needed cash flow during the year.
The Advance Child Tax Credit was created by the Tax Cuts and Jobs Act of 2017 and is available for the 2021 tax year. It is intended to provide a measure of economic relief to families with children by reducing their tax burden. This credit can be taken in advance, meaning it can be claimed before the end of the tax year. The credit is based on the amount of the Child Tax Credit the taxpayer is eligible to claim and is available for tax years 2021 and 2022.
Who is Eligible for the Advance Child Tax Credit?
The Advance Child Tax Credit is available to taxpayers who are eligible for the Child Tax Credit and have at least one qualifying child. To be eligible for the credit, the taxpayer must have a qualifying child who is under age 17 at the end of the tax year and must meet certain income requirements. The taxpayer must have a valid Social Security number for the qualifying child and must not be claimed as a dependent by another taxpayer.
In addition, taxpayers who are eligible for the Earned Income Tax Credit are not eligible for the Advance Child Tax Credit. The credit is also not available to taxpayers who have an adjusted gross income of more than $200,000 ($400,000 for married filing jointly).
How Much is the Advance Child Tax Credit?
The amount of the Advance Child Tax Credit is based on the amount of the Child Tax Credit the taxpayer is eligible to claim. The Advance Child Tax Credit can be taken in advance, meaning it can be claimed before the end of the tax year. The credit is equal to 50 percent of the amount of the Child Tax Credit the taxpayer is eligible to claim for the tax year.
For example, if the taxpayer is eligible to claim an $1,000 Child Tax Credit, they can take a $500 Advance Child Tax Credit in advance. The Advance Child Tax Credit can be taken in increments of $500 and can be claimed up to three times during the tax year.
How Do I Claim the Advance Child Tax Credit?
The Advance Child Tax Credit can be claimed on the taxpayer's federal income tax return. To claim the credit, the taxpayer must complete Form 8862, which is used to claim the credit. The taxpayer must also provide evidence that they are eligible for the credit, such as a copy of their most recent tax return or other documentation that shows their income and the number of qualifying children.
The Advance Child Tax Credit can also be claimed when filing taxes using tax software or a tax preparer. Taxpayers should contact their tax preparer for more information about claiming the credit. The credit can also be claimed using the IRS' Free File software, which is available online at the IRS website.
When Can I Claim the Advance Child Tax Credit?
The Advance Child Tax Credit can be claimed at any time during the tax year. However, the credit must be claimed before the end of the tax year in order to reduce taxes owed. The credit can be taken in increments of $500 and can be claimed up to three times during the tax year.
The Advance Child Tax Credit can be a great way to reduce tax liability and provide an economic boost to families with children. Taxpayers who are eligible for the credit should take advantage of this opportunity to reduce their tax burden and take home more of their hard-earned money.