As any parent knows, babies are money vacuums. Their endless needs for food, clothing, and shelter don’t expire until at least the age of 18. Unless your child becomes an advertising icon for baby formula, they hardly generate any profits.
These human ATMs are dispensing cash as a result of an advance on a 2020 tax credit the Internal Revenue Service expedited owing to the financial hardships created as a result of the coronavirus pandemic. The IRS can take data from 2019 tax returns to determine who the payment might apply to. But if your baby was born in 2020, you might not have gotten what you were entitled to receive.
Why $1100? The amount is actually the total from both rounds of economic stimulus payments in 2020: $500 from the first wave and $600 from the second. Once you file your 2020 return, babies born prior to December 31 of that year will be factored into the Refund Recovery Credit. The money is deducted from the amount of income tax owed for 2020. If you don’t owe any tax, then the money will be part of any refund you may be entitled to. If you have already received $500 earlier in the year, then you’d be due $600.
Income limits are $75,000 for a single filer, $112,500 for the head of household, and $150,000 for married couples filing a joint return. If you find the process baffling, it’s best to consult a tax professional. Make your baby work for you.