The American Rescue Plan offers direct relief to millions of Americans in many forms, including a temporarily expanded child tax credit. Changes to the child tax credit include a tax credit increase of up to $3,600 for children younger than six and up to $3,000 for children between 6 – 17.
Some people will begin receiving partial advance tax payments from July to December of 2021. Parents who are eligible for the full benefit can expect monthly payments of $250 or $300 for one child.
While the monthly tax credit is helpful to a lot of parents, many are concerned about eligibility, its effect on tax payments, and how it will affect child support payments.
At The Law Office of Dmitriy Borschak, we understand how overwhelming understanding child tax credits, child support, and the like can be. This article provides important information and updates about the enhanced child tax credit and its implications on child support.
Continue reading to learn more.
New Changes to The Child Tax Credit 2021
It’s important to note that the changes to the child tax credit are temporary. There is a chance that Congress will extend the expanded child tax credit, but no guarantees. For 2021, key changes to the child tax credit include:
- Increased tax credit amount from $2,000 per child to up to $3,600 per child
- Fully refundable child tax credit (even if you owe back taxes)
- No minimum income requirements (i.e., people with zero income may qualify)
- Advanced payments for half of child tax credit for 2021
- Lowered “phase-out” income requirements
Should I Take Advantage of The Monthly Child Tax Credit?
It depends. Some tax professionals caution against accepting monthly child tax credit payments for individuals whose income significantly increased from 2020 – 2021 (i.e., you received a raise).
That’s because the child tax credit amount is determined by taxes filed in 2019 or 2020. So, if you receive the tax credit, but your income dictates a smaller tax credit than paid, you may end up paying taxes or receiving a smaller refund.
Additionally, since half of the 2021 tax credit is prematurely issued via monthly payments, you could potentially pay more in taxes because you’ve already taken the credit. Whereas, if you opt-out of the advanced monthly payments, you will receive the full tax credit when you file your taxes in 2022.
If you are a non-filer, you may still qualify for the full tax credit. However, the IRS requires you to file a 2020 return – even if you did not make any income.
How Does The Enhanced Child Tax Credit Affect Child Support
In most cases, a parent who makes child support payments is not eligible for the child tax credit. However, in certain joint custody situations, both parents can apply for the tax credit.
Otherwise, the enhanced child tax credit does not affect child support. The IRS can not use it against back child support payments or otherwise withhold it. However, the tax credit income can still be garnished by creditors.
How is Child Support Calculated in Ohio?
In Ohio, child support is calculated based on the combined income of both parents in addition to an overall statutory calculation. A family court judge considers the following information when considering child support payments in Ohio (but not limited to):
- Individual income of each parent
- Combined Income of the parents
- Child care expenses
- Health insurance premiums
- Spousal support payments
- Child support orders currently in place
In some cases, judges can deviate from the recommended child support payments. However, you must meet certain criteria. Continue reading to learn more about child support deviations in Ohio.
What Are Child Support Deviations And How Can You Qualify For One?
Child support deviations can be applied for various reasons. A deviation allows the judge to decrease recommended child support for various reasons.
For instance, an automatic 10 percent reduction in child support is mandatory if the child spends at least 25% (90 nights) of their time with the non-custodial parent.
According to ORC 3119.23, a judge may grant additional child support deviations in Ohio under the following conditions, but not limited to:
- Children with special needs
- Other types of court-ordered payments like spousal support or alimony
- The child’s financial resources and ability to earn an income
- Standard of living of each parent and the child before the divorce
- Additional child-care costs
- Certain education expenses
Understanding child support deviations in Ohio can make a significant difference in the amount of child support owed. Consulting with a proven child support lawyer in Ohio is the best way to protect your child’s best interest as well as your own.
Contact the Law Office of Dmitriy Borschak today for a free initial consultation.
