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How Much is the Arizona Tax Credit for Having a Baby

by | Jan 31, 2022 | Blog, Tax Credits

Arizona tax credit

 

As the COVID-19 pandemic moved the global economy and society to life-changing situations, the US Congress passed several financial provisions, helping families around the country. One of the most widely used is the child tax credit. This Arizona tax credit offers benefits to tens of millions of Americans, supporting millions of low-income families to care for their children. Its principle works similar to the Arizona charitable tax, where a taxpayer contributes to the best charitable organizations in the state, helping low-income families in return. According to reports, the final payment of the child tax credit went to its recipients last December 15, 2021. However, there are still plans to work for Americans this 2022.

In this case, before we discuss how much is the Arizona tax credit for having a baby, let us first discuss how it started, how it works, and what the plans might be.

Child Tax Credit’s Formative Years

The idea of the child tax credit began under the presidency of Bill Clinton in 1997. US parents with an annual income of up to $75,000 (individual filers) or $110,000 (joint filers who are married) receive a maximum of $1,000 per child who must be below 17 years of age. Once tax returns are filed, this amount will be paid to the parent.

This scenario continued until the 2017 Tax Cuts, and Jobs Act was approved. It boosted the amount to $2,000, instead of $1,000, per child, plus increased the income limit to $200,000 for single taxpayers and $400,000 for married taxpayers filing using joint accounts. There is also a credit refundable of $1,400 under this provision. Same as the first process, the parent receives payment once tax filing is completed.

In March 2021, Congress passed the American Rescue Plan, giving the child tax credit another boost. This time, the amount increased to $3,600 for children five years and below and $3,000 for those who are 6 to 17 years old. The payments were given in monthly installments.

The Advent of Advance Child Tax Credit Payments

In July 2021, parents who had filed for 2019 or 2020 IRS tax returns were automatically included to begin receiving monthly payments, which were noted as advance payments for the 2021 tax credit. As the name implies, the advance child tax credit pays the parents half of the credit in advance even before the tax return is applied. The payment depends on a 12-month calendar, but the provision started already in July. Hence, the parents can only have half of their child’s tax credit money.

Taxpayers (parents) who have a low income did not have to file a 2019 or 2020 tax return were not included in the automatically enrolled list for advance child tax credit payments. The IRS established an online tool that allows these parents to register in this tax provision. The eligible taxpayers who signed up before November 15’s cut-off time received all monthly payments for 2021 in December of the same year.

 

Arizona tax credit

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IRS on How Much Child Tax Care You Will Receive

The IRS is the proper authority to determine how much child tax credit you receive. They will send out a letter to the parents about all the information they need. You will receive the note at the recent address you listed on your IRS file. Nevertheless, you can update the locations through the tax credit portal.

The IRS uses the recent tax return on file to compute how much a parent receives as child tax credit payments. The tax return file has the payer’s information, including the address, income, dependents (children or parents), and tax filing status.

However, taxpayers that may have had life adjustments in 2021 will experience a difference in how many tax credits they are entitled to. Some of the factors include:

  • The registered child in the tax return file does not live with the parent for a minimum of six months.
  • The parent’s income increased more than the limit, canceling the eligibility for this tax credit.
  • The parent has been out of the US for more than six months.
  • The tax filing status is still pending.

If these taxpayers receive an advance tax credit, a certain amount might be required to be repaid to the IRS. However, conditions still apply, and not all are necessary to give back the money. It is then best to call the IRS to know more.

Can You Still Receive Advance Arizona Tax Credits For Having A Child This 2022?

There is no final decision announced yet as to whether the advance child tax credit will be extended or not for the entire 2022. As of today, the conditions of the pre-2021 tax credit will apply, and the distribution won’t be monthly as what happened in 2021.

It only means that the tax credit amount returns to its old price – $2,000 per child, which is given as a lump sum for singles, heads of households, married persons filing separately with $200,000 per year, and couples with joint filing at $400,000. The refundable credit remains at $1,400.

As there is no word for further instructions regarding this provision, the child tax credit as a whole process is expected to be terminated after 2025.

 

qualified charitable organization

 

Final Thought: What Happens Next?

The monthly advanced child tax credit of 2021 aims to assist families in caring for their children, lessening the burden of childhood poverty because of various factors, including the COVID-19 pandemic. The advance child tax credit was increased and given monthly to support the family’s daily expenses, instead of waiting for it yearly and given in lump sum. It also allowed families of no to low income to have financial aid, even those who couldn’t file for the given tax year. As this provision ended in December of 2021, many fear that many families around the country will go back to the poverty line.

You can look into the best use of your Arizona tax credit by donating them to the best charitable organizations in your state. For example, you can get in touch with a qualified charitable organization in Arizona and give them contributions. They can give you a receipt that you can bring during tax filing. The best charitable organizations should be able to provide you with all the assistance you need for handling your contributions.

Suppose a US taxpayer is interested in finding the best charitable organizations in AZ. You may want to check Children’s Care Arizona, a qualified charitable organization in Arizona whose primary purpose is helping low-income children have decent care and support for their supervision and extracurricular activities in school.