Third stimulus check: $1400 or $3600 per child, what's the difference?
Democrats’ new stimulus bill proposal includes several proposals to help families with children, but what’s the difference between the provisions?
There’s a wide-ranging stimulus package being hashed out behind closed doors while the Senate is in recess this week. The proposal is being based on President Biden’s American Rescue Plan (ARP) which he unveiled in January.
As well as provision for $1,400 stimulus checks to qualifying Americans - to add to the bipartisan $600 pay out in December – the $1.9tn bill also includes support for small businesses, and expansions to both unemployment support and child tax credits.
The details are still being worked on in committees in Congress this week, there are 12 House committees writing pieces of the Democrats' covid-19 relief bill. So far the Ways and Means, the Education and Labor, Financial Services, Transportation and Small Business Committees have passed their pieces of the proposal.
However here’s what we know about the provisions for child dependents and child tax credits as they stand and how they compare with one another.
Child tax credit: up to $3,600 per year, per child
The stimulus proposal would include a huge expansion of the existing child tax credit system. Child tax credits provide to parents and legal guardians financial assistance with the cost of raising children. Classed as a credit, it allows parents to subtract a certain amount from their federal tax liability.
Currently child tax credit tops out at $2,000 per year. The new child tax credit provision could see the federal government provide up to $3,600 a year for each eligible child, distributed in the form of a monthly direct deposit instead of having to wait for a one-off payment at the end of the tax year.
According to the Washington Post, who obtained the full details of the ARP, qualifying households would receive up to $3,600 a year for children under six, and up to $3,000 a year for those aged between six and 17.
Single parents who earn less than $75,000 and joint-filers who earn less than $150,000 would be entitled to the full amount. Above these thresholds, the amount you are able to receive would be gradually phased out.
The Center on Budget and Policy Priorities claims that the credit would be fully available to 27 million children under the plan and other research indicates that the proposal could cut the child poverty rate in half.
Recent proposals in House committees suggest that there are potential plans on the table to even make the expansion permanent under the American Family Act.
Child dependents: $1,400 per child one-off payment
Child tax credits are not the only provision made in the $1.9tn stimulus bill that Democrats have drawn up. There is also provision for individual tax filers to receive $1,400 per person as a one off “Economic Impact Payment” or stimulus check. For each household, every child dependent – under the age of 17 by the end of the tax year – would also be entitled to $1,400.
As for which child dependents would qualify for the stimulus check, he rules looks set to be the same as for filers claiming stimulus checks. So in order to get the full amount before phase-out begins, it’s individuals with an AGI of up to $75,000, married couples filing jointly with an AGI of up to $150,000, heads of households with an AGI of up to $112,500. These calculations likely based on current negotiations.
Child tax credit may be more valuable than stimulus checks
“The child tax credit is going to be more important to many families than the economic impact payments,” said Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center, a non-partisan think tank, talking to CNBC.
As things stand, qualifying families within the income limits would be entitled to both child tax credit expansions and stimulus checks for child dependents, under the bill.
For all the latest stimulus check and child tax credit news and updates as they happen, follow our dedicated rolling live feed.
To be able to comment you must be registered and logged in. Forgot password?