Can I get $1,400 third stimulus check and $3,600 child tax credit?
President Biden's $1.9tn coronavirus relief bill includes significant economic-aid measures for US families with children.
Stimulus check and child tax credit: can I get both?
Yes, you can. For eligible families with children, the direct-payment and child-tax-credit schemes in President Biden’s $1.9tn coronavirus relief bill, which was signed into law on 11 March, offer significant financial aid: put together, they provide a potential $5,000 per child, in addition to parents’ own stimulus check.
Stimulus check: who qualifies, how much do you get?
As part of the latest round of stimulus checks, the third since the start of the covid-19 pandemic, payments of $1,400 are being sent out to individuals earning up to $75,000 a year and joint filers with a combined annual income under $150,000, with smaller checks available to those with earnings below $80,000/$160,000.
And those eligible for a stimulus check can also claim an extra $1,400 for every dependent listed on their most recent tax return (relating to either the 2019 or 2020 tax year).
This additional credit includes all dependents - unlike the first two batches of checks, which left out those over 16. What’s more, it is significantly larger than the $500 and $600 distributed per dependent first and second time around, respectively.
On Wednesday, the Internal Revenue Service (IRS) said it had distributed around 90 million stimulus checks so far, with nearly 160 million households across the US set to get a payment.
Expanded child tax credit: who qualifies, how much do you get?
Meanwhile, the expanded child tax credit in Biden’s stimulus package is a temporary, 12-month program that sees eligible families get a total of $3,000 for every child aged six to 17, and $3,600 for every child under six.
The income eligibility thresholds mirror those of the stimulus check: individual parents earning under $75,000 annually and couples on below $150,000 a year get the full amount, while gradually decreasing payments are also available to those whose earnings exceed those caps.
Between July and December 2021, parents will be able to claim up to half of their overall credit in monthly payments totaling a maximum of $250/$300 each. They will then be able to get the remaining six months' worth when they submit their 2021 tax return next year.
A claimant's income in their most recent tax return - from either 2019 or 2020, as in the stimulus-check scheme - will be used to determine eligibility.
What is a tax credit?
A tax credit is a sum of money taxpayers can subtract from the amount of tax they owe a country's inland revenue. It can be refundable, allowing you to claim the full credit even if it is more than your tax bill, or non-refundable, which limits what you get to no more than the tax you owe.
A key aspect of the expanded child tax credit is that it is refundable, so households will be able to get the full figure even if they pay less in taxes.
Previous child tax credit
Previously, individuals with an annual income below $200,000 and married couples on under $400,000 a year were able to claim an annual child tax credit of $2,000 for children aged 16 and under, unless that amount was more than the tax they owed, in which case they could seek an alternative credit of up to $1,400.
This scheme also included an earnings floor whereby a family must earn a minimum of $2,500 per year to qualify. This requirement is not a feature of the new credit.
Stimulus checks, child tax credit to have major impact on US poverty
According to the Urban Institute, a Washington DC think tank that carries out research into economic and social policy, relief measures such as the third stimulus check and the new child tax credit will help the US to bring a previously-projected 2021 poverty rate of 13.7% down to 8.7% - and will more than halve child poverty in the country.
Third stimulus check: live updates
You can get the latest information on the third round of stimulus checks by following our dedicated live blog.