WHAT IS THE 2021 CHILD TAX CREDIT?
Minnesota parents should soon receive their first payments from the child tax credit. Congress and the Biden administration voted in March, 2021 to give parents under a certain income threshold up to $3,600 to help raise their children. If you want to know how much you will get or how to change the bank account where it gets deposited, you should go to this website.
THE 2021 CHILD TAX CREDIT IS PROTECTED IN BANKRUPTCY IN MINNESOTA
Any parent knows that children are expensive, so this extra money is very useful, and will want to keep it for their family. So how does bankruptcy impact the payment? Luckily, Congress was careful to make sure that this money is protected in bankruptcy. That’s right, you will keep the special 2020 Child Tax Credit if you file bankruptcy in Minnesota. The law allowing for this is 11 U.S.C. Section 541(b)(11). This law was created especially for the Coronavirus pandemic.
HOW DO TAX CREDITS AND TAX REFUNDS NORMALLY WORK IN BANKRUPTCY
Apart from this tax credit, you should talk with a lawyer to see which tax refunds are protected in bankruptcy. In Minnesota, people who do not own a house can usually protect any tax refunds that the government owes to them.
If you do own a house, then the laws are a little less generous about tax refunds. If the government owes you any tax refunds on the day of filing the case, then the refund that the government owes you is not protected. Chapter 7 only counts refunds owed to you on the that the bankruptcy is filed, so it doesn’t follow you for future tax refunds.
If you own a house you also get to keep the Federal Earned Income Credit, which can be almost $8,000 and the MN Working Family Credit, which is smaller but still valuable. Both of these credits are for people with children. The bankruptcy system understands that people need money to raise their children, and works to be fair.
