Although it is still subject to change, President Biden’s $ 1.9 trillion stimulus package includes a clause that would temporarily increase the child tax credit from $ 2,000 to $ 3,000 per child ($ 3,600 for children 5 years and under) for the year tax of 2021. It would also authorize periodic “family allowance” payments to families from July to December. Half of the total amount of the credit would be paid in advance with periodic payments, while the other half would be claimed in the tax return that you will submit next year.
However, not everyone would receive the additional amount from the president’s plan. And some families did not receive any credit (or periodic payment). This is because the credit would be reduced – or even eliminated – for people with an income above a certain amount. In fact, there would be two “phasing out” rules at play – one just for the extra $ 1,000 (or $ 1,600) and one for the remaining credit. This makes calculating total credit and periodic payments very complicated.
The huge stimulus package has already been approved by the Chamber and must be approved by the Senate as well (albeit with some modifications). But if you don’t want to wait until the final ticket to see how much money you will receive, answer the four questions in the calculator below and we will give you a personalized estimate of the amount you will receive in advance from July to December (assuming monthly payments) and how much you could claim as a child tax credit in your 2021 tax return. Again, the child tax credit proposal may change before the final ticket, which can affect how much you receive. But for now, you can use the tool to see where you are in the current plan.
[Stay on top of all the new stimulus bill developments – Sign up for the Kiplinger Today E-Newsletter. It’s FREE!]
Current child tax credit amount
The current child tax credit is $ 2,000 per eligible child. It is phased out (but not below zero) for joint filers with adjusted gross income (AGI) of $ 400,000 or more and for other contributors with AGI of $ 200,000 or more.
Proposed phasing-out scheme
According to the plan approved by the Chamber, 2021 increase (that is, the extra $ 1,000 or $ 1,600) would be phased out for joint filers with an AGI of $ 150,000 or more, chief household filers with an AGI of $ 112,500 or more, and all other contributors with an AGI of $ 75,000 or more. However, the increase cannot be reduced below zero (other limitations to this reduction also apply).
After calculating any reduction in the increased credit amount, the current elimination would be applied to the remaining credit amount. Therefore, for joint filers with an AGI of $ 400,000 or more and other contributors with an AGI of $ 200,000 or more, the credit would be subject to an additional reduction – possibly to $ 0.
Proposed Periodic Payments
Once the amount of the credit was determined, 50% of it would be paid in advance with periodic payments according to the house bill. But these periodic payments would only be made from July to December 2021. (We expect monthly payments, but the advances may be based on a different schedule.) The remaining 50% would be claimed as a credit in the taxpayer’s 2021 income tax return.
The IRS would also be required to create an online portal for people to update their income, marital status and the number of qualified children. You can also use the portal to cancel periodic payments, if you prefer, instead, to receive the child’s full credit on his 2021 return.
For more information on the proposed child tax credit plan, see House approves $ 3,000 child tax credit for 2021.
Stay on top of stimulus verification developments
Follow Kiplinger for the latest news and insights on economic stimulus developments (and other important personal finance issues). Stay with us at:
the e-mail. Subscribe to our free daily electronic newsletter Kiplinger Today.
social media. Follow us on Instagram, Twitter and Facebook.
podcasts. Subscribe for free to our weekly Worth your money podcast on Apple Podcasts, Google, Spotify.