What the child tax credit means for the upcoming stimulus
With the stimulus checks coming out, Americans are curious as to what a child tax credit means. Congress has been very busy lately. There is a new provision that has recently been approved from voting on new bills to become laws. Since approving the $1.9 trillion Covid-19 bill, Congress has made steps toward getting our economy going.
Congress has passed the $3,000 Child Tax Credit for this year. This tax credit will increase the child tax credit from $3,000 to $3,600 per child. The new credit is designed to help families with children.
Child Tax Credit and the Stimulus Package
The approval of President Biden’s stimulus package regarding the coronavirus by Congress will help stimulate the economy in many ways. One provision in this stimulus bill is a child tax credit for those who qualify.
The plan would increase the child tax credit, and it would be fully refundable. At this time, the child tax credit is $2,000 per child under age 17. When you filed your 2020 taxes, you claim these children as dependents. If they have a social security number, they are counted.
The center on budget and policy priorities site discusses how the new child tax credit will help aid families who were hit badly by the pandemic. Many families have lost their jobs because of COVID-19.
The expansion of the tax credit will help these families get back on their feet to not worry so much about money. It will also help reduce child poverty. This includes losing school time for many children who cannot afford the internet for virtual schooling.
How Do You Qualify For the Child Tax Credit?
To qualify for the child tax credit, the child has to be related to you and have lived with you for at least six months of the year. If the taxpayers’ adjusted gross income is over $400,000 for married couples, the credit is phased out.
If you make over $200,000 on the single head of household return, then the credit will be phased out as well. Up to $1,400 can be refundable if you are a lower-income individual who has children. These individuals must earn an income of $2,500 to see a refund.
Some families will not get the increased tax credit, though. Adjusted Gross Income families of $75,000 for single parents and $112,500 for the head of the household families will not get this credit.
The IRS takes a look at the 2020 federal tax returns to determine who gets the credit or not. If you did not file a return for 2020, the IRS looks at the 2019 returns.
The families whose incomes exceed the cut-off will get $2,000 per child. These payments from the IRS are slated to be in direct deposit form and begin in July. This gives the IRS a couple of months to get things set up and going.
The income tax credits would arrive in monthly payments and for about 6 months. If your family were to qualify, they could get up to $800 per month from the IRS.
How Much Tax Credit For Each Child?
Depending on how much your family made the last tax year they filed, the amount per child can vary from family to family.
For some families, the credits range from $2,000 to $3,600. Again, the families who do not qualify will still receive the $2,000 regular credit per child.
Each month, families will get a direct deposit. If you qualified for $4,800, you would get $250 per child’s monthly payments for the credit. There is a tax credit calculator available online to gauge how much you can earn for your children.
How Will the Stimulus Affect the Child Tax Credit?
The COVID-19 stimulus package includes the latest $1,400 stimulus checks, and eligible parents will receive the checks and child tax credit.
Children will get the same amount that the parents get for the third round of stimulus checks. The last round of checks only added $500 per child to the checks.
Once the child tax credit exceeds what eligible parents are of alotment, the payments will end. This expanded tax credit only applies to this year.
This credit is also fully refundable, and parents who have little or no income will also qualify for the full credit per child. This credit to help the economy and aid parents who need help with money and their children.
This tax credit seems to be a good idea. Hopefully, all will work out well with these new provisions, and we can all start to breathe again.