$3000/$3600 Child Tax Credit: who is eligible and how to claim?
The American Rescue Plan will be sending more help to families with children in 2021 through an enhanced Child Tax Credit, providing monthly payments.
Raising children can be an expensive proposition but the $1.9 trillion American Rescue Plan Act has a provision to help parents with up to $300 per month per child. Although the bill envisioned the payments to start in July, the Internal Revenue Service (IRS) may not be able to meet that expectation due to the extended tax season.
The new system provides a refundable tax credit of $3,000 for children aged from 6-17 and $3,600 for children who are under the age of six for the 2021 fiscal year. In order to receive the enhanced Child Tax Credit in 2021 parents will need to file a 2020 income tax return along with a Schedule 8812 with their 1040 tax form.
Who is eligible for the enhanced Child Tax Credit?
Under the new legislation, individuals will qualify for the enhanced Child Tax Credit 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 which gradually phases out and end for individuals earning $95,000 and married couples earning $170,000 filing jointly.
Families could receive a payment of $300 per child under 6 and/or $250 per child under 18. The provision calls for the payments to go out monthly starting 1 July, through December, although the IRS Commissioner Charles Rettig told Congress that the agency might not have the resources to meet that date or even send the payments monthly. The bill contemplated that sending the payments monthly might be too tall an order for the IRS to meet.
Ideally families would receive half of the credit in 2021 through direct payments, similar to how the $1,400 stimulus checks in the same bill are sent. The remainder, $1,800/$1,500, would be available to families as a rebate when they file their 2021 income-tax filing in 2022.
IRS chief warns that it may not be able to start sending child tax credit payments in July, as called for by the $1.9 trillion relief law https://t.co/Bt9cS5Imv3— CNN Politics (@CNNPolitics) March 20, 2021
How to claim the enhanced Child Tax Credit
Taxpayers who are eligible for the enhanced child tax credit and file a 2020 tax return this year along with a Schedule 8812 with their 1040 tax form will be automatically signed up to receive the payments. The IRS has stressed that filing this year will be important to take advantage of new tax provisions included in the American Rescue Plan Act. People will also be able to claim any stimulus money that they were eligible for but haven’t received yet.
Enhanced Child Tax Credit will reduce childhood poverty
By removing the earnings floor of $2,500 to begin to be eligible for the Child Tax Credit many more low-income households will be able to benefit from the tax provision. These changes will put more money in families’ pockets and 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 Child Tax Credit legislation.
Experts believe that this Child Tax Credit expansion will dramatically reduce child 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. The lowest-income families would see their disposable incomes boosted by 37.4%.
The stimulus plan’s child tax credit “will actually maintain and lift living standards for millions of women and their children,” a senior economist said. “And it will disproportionately bring Black kids and Hispanic kids out of poverty.” https://t.co/LYIK7SrWZh— The New Yorker (@NewYorker) March 16, 2021
Te recomendamos en English
- OLYMPIC GAMES USA at Tokyo Olympics 2021: medal winners, athletes and results, 24 July
- AMERICAN RESCUE PLAN How much money can you get from stimulus checks and the Child Tax Credit?
- OLYMPIC GAMES USA at Tokyo Olympics 2021 live updates: medal count, athletes and results, today 24 July
- Olympic Games Since when is skate an olympic sport and why?
- OLYMPIC GAMES What is the USA basketball roster for the 2021 Tokyo Olympic Games?
- OLYMPIC GAMES USWNT bounce back in crushing 6-1 New Zealand win