The ongoing pandemic has largely affected the economy. Many families are pushed into poverty and hunger after losing their jobs. To boost the countries economy and help the low and medium-income families, president Joe Biden came up with the American rescue plan.
Funds of about $1.9 trillion dollars have been sanctioned and 3 rounds of stimulus cheques have been sent out already. The child tax credit is boosted this year to help families with children. Check out all the details below.
Child tax credit
This is a tax benefit given to the qualifying citizens of the US with children. This benefit is designed to help taxpayers support their families. It is estimated that this year’s credits will help almost 45% of the families out of poverty.
The main class to be benefitted are the low and middle-income families. High-income families might not be eligible for the credit or might just get a small amount.
Eligibility
- The child must be a US citizen
- must have lived with the applying parent for half the tax year
- the parent must have cleared all taxes by may 17th else the credits will be given out based on 2019 tax report
- social security number is a must for the taxpayer and the dependent child
How is it different this year
A lot has changed in the child tax credits this year. The amount was $2000 in 2020. This year the amount has increased to $3000 for children below 17 years and $3600 for children below the age of 6 years.
The credit this year is fully refundable but last year it was only partially refundable. Advance payments will be made this year starting a month early. Even the non-taxpayers and people with no tax obligations will be paid this year.
When will the payments start?
The payments will start in July and will continue till December. The money can be taken as monthly installments of about $250 to $300. The credits are given out this way so that the families do not spend it all at once.
These payment changes might be applicable for the upcoming years as Joe Biden is planning to extend the plan till 2025.
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