Although theincluded in the bill can make headlines as well Over time, the extension of the child discount through the package can bring in more money for many families. The increases the existing child discount, or CTC, to a whopping $ 3,600 per child (more than double that ) and would allow families to receive the money “periodically” rather than just annually This increase in the CTC would reduce child poverty by 40%, according to a report from the Center for Budget and Policy Priorities.
Here’s everything you need to know about the CTC, including eligibility requirements for you and your kids, how much money you could get, and all that could turn into a final law. (Here’s everything.) This story has been updated with new information.
What is the tax credit for children?
At a basic level, the child discount is a credit that parents and carers can claim to reduce their sizedepending on the number and age of their family members. For many, it can be a much-needed source of relief as part of a diet
The CTC is currently a $ 2,000 credit that parents can claim on their taxes for any child under the age of 17 (same age bracket forwhen it comes to the first and second And if that credit is greater than the amount of 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 discount of $ 6,000 unless they have , in which case they would receive $ 4,200.
Will I qualify for the child discount in 2021?
Families with children under the age of 6 would receive up to $ 3,600 per child. Families with children 17 and under would receive a credit of $ 3,000 per child. Families with older children are also eligible: You can claim $ 500 for each child ages 17-18, or for full-time students between the ages of 19 and 24.
The tax credit applies to children who are considered to be your family and who stay with you for at least six months a year.
Note that while admission requirements are relatively broad, higher income families may receive lower credit. But married couples filing jointly with adjusted gross income of less than $ 400,000 are eligible for the full amount, as are individuals with anunder $ 200,000.
The size of the credit would gradually diminish for singles earning more than $ 75,000 per year, $ 112,500 for heads of household, and married couples earning more than $ 150,000 per year.
Other ways the child tax credit could change with the new relief law
In addition to new qualifications and payment amounts, thewould extend the tax credit so that:
- The credit would be repaid in full.
- According to the Center on Budget and Policy Priorities, there would be no dollar ceilings and income limits that prevent many low-income families and children from receiving full credit.
- Payments would be sent monthly over the course of a year, starting July through December 2021, rather than once during tax season.
The bill would also expand other child-related credits, so families could claim up to half of their childcare costs on their taxes.
For the bottom 20% of families in terms of income, the proposed expansion of the CTC would increase income by an average of 9.7% – even higher if you only consider tax returns with children, according to the Institute on Taxation and Economic Policy. The proposal would also lift 4.1 million children above the poverty line, reducing the number of children in poverty by more than 40%, the Center for Budget and Policy Priorities said.
Would the child discount be based on 2019 or 2020 taxes?
It probably would depend. The IRS will be in charge of basing your eligibility for the child tax credit on your own, if that is included with the first payment in July. Otherwise – in the case of one , for example – the agency would use your 2019 taxes to determine the amount you owe.
How long does the new child tax credit last?
The 2021 child tax credit is considered a temporary deferment of payment for the year and would only last through 2021. Any changes to a 2022 CTC should be made in a separate bill.
For more information, here, when the , and how