State tax commissioner explains IRS letter about the expanded child tax credit

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Back in March 2021, the government approved the American Rescue Plan which included the expanded child tax credit. Recently, about 36 million letters from the IRS were sent out to families about the child tax credit, raising questions from the people who received them.

While the child tax credit is nothing new to tax season, State Tax Commissioner Ryan Rauschenberger said getting advanced payments is new.

“What many North Dakotans and Americans can expect are these monthly payments that are basically just advancements on this credit that you would normally claim when you file your federal income tax,” Rauschenberger said. “But to get more money in the economy and to kind of help jump-start things more, they put an advance on the credit which again is unusual and unique.”

Children under the age of six will receive $3,600 and children six to 17 will receive $3,000. But there are some income restrictions parents should be aware of.

“As a married couple making less than $150,000 per year or if you’re single you have to make less than $75,000 per year,” Rauschenberger said. “And then those amounts the credit amounts will decrease as those income levels come up and then they are fully phased out once a married couple $170,000 or $95,000 if you’re single.”

Rauschenberger said if you did get a letter from the IRS, that means you’re eligible for the advanced payments but you could also opt-out.

“If all of a sudden your income went much higher, I would think about opting out because you may have to pay some of it back if it comes next filing season and you weren’t eligible for it,” Rauschenberger said. “But for the most part, the IRS is using the best information they have which is 2019 return data 2020 return data.”

Raushenberger wants to remind parents to be patient and that the IRS will send out another letter with more details shortly. Payments for the child tax credit are scheduled to start July 15.

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