Families with children in need of money could see some help soon.
CNETThe $1.9 trillion relief plan made its way through the House of Representative Wednesday by a party-line vote of 220-211. This means Americans will see a $1,400 stimulus check, more money for unemployment and a larger Child Tax Credit (CTC) after President Joe Biden signs the bill on Friday.
Biden's American Rescue Plan increases the existing CTC to as much as $3,600 per child -- that's more than double the $1,400 per dependent in the stimulus check. It would also let families receive the funds "periodically" instead of just annually during tax season. This increase in the CTC would reduce child poverty by 40%, according to a report from the Center on Budget and Policy Priorities.
Here's what you need to know about the CTC, including qualification requirements for you and your kids, how much money you could get and what could change before it's signed into law. (Here's every way caregivers can benefit from a new bill.)
What exactly is the Child Tax Credit?
At a basic level, the Child Tax Credit is a credit that parents and caregivers can claim to help reduce their tax bill, depending on the number and ages of their dependents. For many, it may provide a much-needed source of relief as part of a 2020 tax year refund.
The CTC right now is a $2,000 credit parents can claim on their taxes for every child under the age of 17 (the same age range for child dependents that was used for the first and second stimulus checks). And if that credit exceeds the amount of taxes that a family actually owes, parents can still receive up to $1,400 of the balance as a refund; this is technically referred to as the Additional Child Tax Credit or refundable CTC. For example, a married couple with children ages 5, 10 and 12 would receive a total child tax credit of $6,000 -- unless they're due a refund, in which case they'd receive $4,200.
Watch this: Stimulus check 3: How much money you'll get
2:32
What will change under Biden's plan?
The American Rescue Plan will temporarily give more money to families after Biden signs the bill. Here's everything that changes:
- Credits increase from $2,000 to $3,600 per child under 6 and $3,000 for children older than 6
- The credit would also be fully refundable
- Money from the credit will be split: half will be paid through the tax refund and the other half will be paid monthly from July to December
- There is no $2,500 earnings floor
- Families in Puerto Rico can receive the credit
How do I know if I'm eligible for the Child Tax Credit?
Families with kids under 6 would receive up to $3,600 per child under the new COVID relief bill. Families with children aged 17 and under would receive a credit of $3,000 per child. Families with older kids are also eligible: You can claim $500 for each child aged 17 and 18, or for full-time college students between the ages of 19 and 24.
The tax credit applies to children who are considered related to you and reside with you for at least six months out of the year.
Note that though the eligibility requirements are relatively broad, higher-income families may receive a reduced credit. But married couples filing jointly with an adjusted gross income under $400,000 are eligible for the full amount, as are individuals with an AGI under $200,000.
The size of the credit would start to phase out for single people earning more than $75,000 a year, heads of household earning more than $112,500 a year and married couples earning more than $150,000 a year.
With the Child Tax Credit for 2021, you could get more than one check this year.
Sarah Tew/CNETWill the Child Tax Credit be based on my 2019 or 2020 taxes?
It would likely depend. The IRS will be tasked with basing your eligibility for the Child Tax Credit on your 2020 tax return, if that's been processed by the first July payment. Otherwise -- in the case of a tax return extension, for example -- the agency would use your 2019 taxes to determine the amount you're owed.
How long will the new Child Tax Credit last? Is it permanent?
The Child Tax Credit for 2021 is considered a temporary reprieve for the year and would last only through 2021. Any changes to a 2022 CTC would need to take place in a separate bill.
For more information, here's everything in the 2020 stimulus bill, when the stimulus check could arrive and how to calculate how much money you'd get in a third check.
The editorial content on this page is based solely on objective, independent assessments by our writers and is not influenced by advertising or partnerships. It has not been provided or commissioned by any third party. However, we may receive compensation when you click on links to products or services offered by our partners.
from CNET https://ift.tt/30wxoEh
via IFTTT
No comments:
Post a Comment