Child Tax Rebate for Divorced and Unmarried Parents in COVID-19 Relief Bill

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Families with children in need financially could get some help soon as the $1.9 trillion stimulus bill was approved by the House late Friday night, taking economic relief closer to poor Americans.

While the bill's $1,400 stimulus checks will make headlines and provide money quickly, the package's expansion of the child tax credit may mean more money for many families in the long run. 

The new bill raises the existing child tax credit, or CTC, to $3,600 per child under six and $3,000 per child (up to the age of seventeen) per year. In addition to increasing the dollar sum, the proposal will encourage families to obtain funds every month rather than once a year during tax season.

Further, divorced and living-together parents but never married will get an additional Recovery Rebate Credit of $1,100 per dependent child returns through Economic Impact Payments such as stimulus checks when filing their 2020 tax.

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How do I qualify and avail of a child tax rebate as a divorced and unmarried parent?

For some unmarried couples, taking advantage of this rebate is difficult, but others will be able to do so. This is where it could go from good to great, but it's also possible that it won't.

To qualify and claim this bonus, it will take confidence, coordination, and filling out versions of their 2020 tax returns.

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First, to claim, you must have earned a  taxable income. Wages, bonuses, tips, other taxable employee benefits, and self-employment earnings are all included. Earned a net loss from self-employment decreases income. Please note that strike benefits and any disability pay you report as wages are included in earned income. 

Secondly, your child must be your qualifying person, not necessarily a dependent. According to IRS, he or she is treated as your qualifying person if your child is:

  • Under the age of 13 or wasn't physically or mentally able to care for himself or herself;
  • A recipient of over half support during the calendar year from one or both parents who are divorced or legally separated under a decree of divorce or separate maintenance, Are separated under a written separation agreement, or lived apart at all times during the last six months of the calendar year;
  • in the custody of one or both parents for more than half the year; and
  • You were the child's custodial parent or whom the child lived for the greater number of nights in 2020. If the child was with each parent for an equal number of nights, the custodial parent is the parent with the higher adjusted gross income. The noncustodial parent can't treat the child as a qualifying person even if that parent is entitled to claim the child as a dependent under the special rules for a child of divorced or separated parents.

Further, to the "maximum extent administratively practicable," the bill calls for regulations or guidance to ensure that:

...an individual is not taken into account more than once, including by different taxpayers and including because of a change in joint return status or dependent status between the taxable year for which an advance refund amount is determined and the taxable year for which a credit under subsection (a) is determined.

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Thus, if a 5-year-old child was fathers dependent in 2019 and 2020 becomes mothers dependent, each of them, for the same child, will receive EIP 1 and EIP 2, and all they have to do is communicate.

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