On Saturday, the Senate voted to approve the $ 1.9 trillion American Rescue Plan Act, which includes provisions that increase the child tax credit to $ 3,000 per child ages 6 to 17 and $ 3,600 annually for children under 6 years in fiscal year 2021.
And Americans with children under 18 can start receiving a share of the new credit as early as this summer.
Under Saturday’s legislation, the IRS could start providing advances on the 2021 credit through periodic payments of $ 250 to schoolchildren starting in July, depending on what the Treasury Department determines is feasible. . According to the proposed schedule, which could be as frequent as monthly, families could receive almost half of their total tax credit per child this year and then claim the remaining amount on their 2021 tax returns.
“This plan gives families who are struggling to the maximum the help and the breath they need to overcome this moment,” said President Joe Biden in a statement on Saturday.
The new enhanced benefits, which specifically cover teenagers aged 17 for the first time, are based on income and would begin to be phased out for individuals earning more than $ 75,000 a year or $ 150,000 for those married who file joint actions .
Thereafter, the credit would be reduced by $ 50 for each additional $ 1,000 of adjusted gross income received. This means that the $ 3,000 credit provided to parents of children aged 6 to 17 years would be completely eliminated for individuals who earn $ 95,000 and those who earn $ 170,000 and file joint actions.
Families that are ineligible for the new $ 3,000 credit due to the higher adjusted gross income gain could still claim the $ 2,000 per child credit that is available to those earning up to $ 200,000 ($ 400,000 for couples entering together).
The Covid-19 aid package would also make the benefit fully refundable. According to the current child tax credit, if taxpayers’ credits exceed their due taxes, they can only get up to $ 1,400 in reimbursement. But under the new rules, they could receive $ 3,000 or $ 3,600 as a refund, depending on the age of the child.
Parents do not need to be employed to obtain the new child tax credit. The new provisions allow families without income to claim credit. This is a big change, as the previous rules limited credit to those who earned at least $ 2,500. This meant that families with very low incomes had not previously received full credit.
The American Rescue Plan also extends the child tax credit to those living in U.S. territories.
The House is expected to vote on the Senate version of the American Rescue Plan on Tuesday, before moving on to Biden’s desk for his signature this week.
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