Here's what you need to know about the new stimulus child tax credit

Here's what you need to know about the new stimulus child tax credit

By / Politics / Wednesday, 17 March 2021 02:14

The $1.9 trillion relief package signed by President Joe Biden greatly enhances the federal child tax credit for one year, allowing millions more families to benefit and lifting millions of children out of poverty.

The stimulus package raises the size of the credit, makes it fully refundable so more households can qualify and calls for it to be sent out in periodic payments rather than rolled into regular tax-time refunds -- a dramatic shift designed to help families pay their bills.
Already, some Democrats are pushing to make the more generous credit permanent, pointing to how much it would help poor children.
That would prove costly, however. The one-year enhancement is projected to cost $110 billion, according to the Committee for a Responsible Federal Budget. Making that permanent is estimated to cost north of $1 trillion over a decade.
Here's how the Democratic-backed relief package changes the child tax credit this year:

How much will you get?

The boost to the child tax credit will give eligible parents a total of $3,600 for each child under 6 and $3,000 for each child under age 18 for 2021.
Until now, the credit was up to only $2,000 per child under age 17. Some 90% of families with children are projected to receive an average credit of $2,380 in 2020, according to the Tax Policy Center.

Who is eligible?

The enhanced portion of the credit begins to phase out for single filers with annual incomes of more than $75,000, heads of households earning more than $112,500 and joint filers making more than $150,000.
The existing $2,000 credit phases out for single filers and heads of households earning more $200,000 a year and married couples with incomes of more than $400,000.

What if your income is low?

A key feature of the stimulus package is that it makes the child tax credit fully refundable so more low-income families can benefit.
Until now, if the credit exceeded the taxes owed, parents could only receive up to $1,400 as a refund. These households also must have earned income of at least $2,500.
Curled from CNN


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