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Can Parents Who Share Custody Each Claim The New Child Tax Credit?

Monthly child allowance payments are coming — but here's what to know.

A major part of the legislation in the American Rescue Plan, Biden’s $1.9 trillion stimulus package aimed at digging the economy out of a COVID-19 induced recession, included monthly payments to parents of kids under 18 to the tune of several hundred dollars a month.

Parents of kids under 18 will receive anywhere from $3,000 to $3,600 per child for the duration of the program, breaking out into monthly installments, with one half given out monthly and the other half at tax time, starting in July.

But one question that remains about the program is how single parents who share custody are supposed to deal with the credit.

Can parents who share custody each claim the tax credit? Or is it one payment regardless? 

Here’s what you need to know about the child tax credit, and how single parents are supposed to access the child tax credit payment. 

The Child Tax Credit Rundown

The payments were built out of the already-existing, bi-partisan supported, but woefully inadequate Child Tax Credit.

Congress fundamentally altered the former tax-time benefit for parents by making it fully refundable, available to parents at all income levels (including those who pay very little, or nothing, in federal income tax) up to a certain threshold, and making the payment go out in installments.

Half of the payment will be given out in potential monthly or periodic payment installments, and the other half at tax time.

The changes mean that the vast majority of families with kids in America will receive over $4,000 in cash payments to help them with the costs of raising kids. 

The radical changes to the tax credit mark the first time the federal government has truly experimented with a basic allowance for American parents — and though the program is temporary, only going to be offered through the end of the year, Democrats are already aiming to make said payments permanent.

And it’s clear why: estimates have shown that the plan would reduce child poverty by 45 percent and lift 5 million kids out of poverty simply by giving them cash in order to afford their lives and the lives of their children. 

What’s the Skinny on Shared Custody and the Tax Credit?

What may be confusing about the program is how, per CNET, the last few stimulus checks were handled for parents who had joint custody of a single child. For the first two stimulus checks, unmarried parents who had joint custody of a kid could each claim and receive dependent stimulus payments for the same child — if they alternated the years in which they claimed their kid on their individual tax returns. That loophole was closed for the third stimulus check round. 

That unfortunately means that only one parent in a shared custody arrangement can take advantage of the child tax credit when they start to come out in July. If both parents do take advantage of the tax credit even when they share custody of a kid, one parent will have to repay the payment the following year. 

So, if you share custody, talk to the person you co-parent with and figure out what you’re going to do when July comes.