My daughter is disabled and her only income is SSI. Her 6-year-old son is also partially disabled, having autism and ADHD. Can she take advantage of the new child tax credit that starts in July? If she can, how does she file her 2020 taxes since she has no income other than her SSI?
Yes, it sounds like your daughter will qualify for the expanded child tax credit. Typically, to qualify for the child tax credit, you need at least $2,500 of earned income, which is basically money you earn by working.
But in 2021, the rules are different. You don’t need earned income to qualify for the credit. So as long as your daughter can claim your 6-year-old grandson as a dependent for tax purposes — meaning she provides more than half of his support — she should qualify for that money, even though Supplemental Security Income (SSI) is her only income source.
As the parent of a child between the ages of 6 to 17, she should be eligible for $250 beginning July 15 and continuing through December. Then, she’ll receive the other $1,500 of the $3,000 credit at tax time next year.
To be on the safe side, your daughter should file a tax return even though she’s not required to. You’re allowed to submit one even if you don’t have taxable income. The easiest way to do so is to use a free tax filing software. Your daughter will need to input both her own Social Security number and her son’s. For income, she can simply enter $1. The IRS may reject it as a blank return if she enters it as $0. Providing her bank account and routing numbers for direct deposit will help her get the payment as soon as possible.
If your daughter received the three stimulus checks that have gone out since April 2020 and received payments on behalf of her son, the IRS probably has the information it needs to get your daughter that money.
But as of June 1, the IRS was urging people to file their 2020 tax returns ASAP to make sure they get the credits quickly. So until we get further instructions, I’d go ahead and file since it’s free and only takes a few minutes.
Robin Hartill is a certified financial planner and a senior writer at Codetic. Send your tricky money questions to [email protected].