$3000/$3600 child tax credit per child: can I apply?

After a revised stimulus relief bill eventually made its way through Congress, families are considering the additional financial assistance that is coming their way. President Joe Biden’s $1.9 trillion American Rescue Plan includes provisions that restructures Child Tax Credit (CTC) effectively doubling the size of the existing credit and providing an extra $125 billion. And US Senate Democrats are pushing to make this permanent.

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The full credit - which is being increased for one year to $3,000 for children aged from 6-17 and $3,600 per year for younger children - will be available for low-income families and part of it can be received as a cash payment which will provide many with instant aid should they need it. Experts believe that this CTC expansion will dramatically reduce child poverty by boosting the disposable incomes of the lowest-income families by 37.4%.

Child Tax Credit: can I apply?

The new legislation states that individuals could qualify for the new CTC if their annual earnings are below $75,000; or a joint income of up to $150,000 for married couples. If your earnings are above those limits, you will receive a reduced credit or may not even get a credit at all.

The other change is that it makes CTC fully refundable by removing a rule limiting the refundable portion to $1,400 and by removing the earnings requirement (the current rules limit the refundable portion of the credit to a percentage of earned income in excess of $2,500).

These changes put more money in families’ pockets and also extend the credit to children who are left behind by the current credit. According to a report by the Institute on Taxation and Economic Policy (ITEP), approximately 83 million children live in households that would benefit from the new CTC legislation.

CTC should be fully functioning by the summer

The Biden administration planned that the expanded CTC will be sent out in monthly payments of $300 per child, rather than a lump sum, starting from July through to the end of the year, although that presents a new administrative challenge for the IRS who are already snowed under dealing with tax filing and distributing stimulus payments.

In theory, families could receive almost half of their total CTC by the end of 2021, then claim the remaining amount on their 2021 tax returns. Child Tax Credit can be claimed by filling in Schedule 8812 (Form 1040), each qualifying child must have the required social security number (SSN).

Child tax credits: could they become permanent?

Senate Majority Leader Chuck Schumer said that making enhanced child tax credits permanent is an important goal for Democrats, as they seek to move forward with bold new initiatives that also include legislation to upgrade US infrastructure.

Senator Kirsten Gillibrand, Schumer's fellow New York Democrat, called separately for enhancements for a nutrition program aimed at women, infants and children in the $1.9 trillion bill to be extended indefinitely.

Biden's legislation temporarily increased the value of the program's cash vouchers for fruits and vegetables from $9 per month for children and $11 for women to $35 per month for both.

Expanding CTC for one year from a partially refundable $2,000 per child to a fully refundable $3,600 or $3,000 is a move that experts say will significantly decrease child poverty in the United States.

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"That's one of the most important things we can do. We can change America, if we make them permanent," Schumer told MSNBC. "It will be so good for these kids, their families, but for all of America and our economy."

Nearly 11 million, or one in seven, US children live in poverty, the Center for American Progress, a progressive think tank, estimates. Making the provisions permanent could prove difficult, with many Republicans opposed to any expansion in US welfare services that is not accompanied by work requirements for benefit recipients.

The Democratic-controlled House of Representatives can pass legislation on a simple majority and has begun to move bills that reflect party priorities such as police reform, gun control and measures to enhance voter participation. But the 100-seat Senate, which is split 50-50 between Democrats and Republicans, requires 60 votes for most legislation.

Schumer said Democrats would try to work with Republicans to enact "bold change" but warned that his caucus would consider other means, including possible changes to Senate rules, if Republicans continue to oppose Democratic legislation.

"But if we can't, if they vote 'no' on everything in terms of the kinds of change that America needs, then our caucus will have to get together and figure out how to get it done," Schumer said. "Everything will be on the table and failure is not an option."

Biden's covid-19 bill passed the House and Senate without support from a single Republican.