How Much Money Would You Get From the Boosted Child Tax Credit?
The Child Tax Credit is getting a facelift -- and it could put more money in a lot of people's pockets.
President Biden's $1.9 trillion coronavirus aid package is getting closer to being signed into law. Once that happens, jobless workers collecting unemployment benefits will be in line for an extended $300 weekly boost, and stimulus checks worth $1,400 apiece will begin hitting Americans' bank accounts in short order.
But while many people are looking forward to getting another stimulus payment, perhaps the most overlooked part of the relief bill is the expanded Child Tax Credit. If you have children, you could be in line for a larger payday starting this summer.
How the new Child Tax Credit will work
First, let's get one thing out of the way: Under the new relief proposal, the Child Tax Credit will be expanded for one year only, though Democratic lawmakers do hope to make that expansion permanent. But if you have children, you could be in line for a lot more money very soon.
To understand what sort of increase, you'll need to know how the Child Tax Credit works at present. Parents with children under the age of 17 are eligible for a credit of up to $2,000 per child. Individuals with an income of $200,000 or less and married couples with an income of $400,000 or less can receive that credit in full, after which it begins to phase out for very high earners only. These income limits will apply to the new, expanded version of the credit as well.
So, let's dig into that expansion, which could benefit as many as 83 million children and slash the number of children living in poverty by over 40%, at least temporarily.
First, the credit will increase to $3,600 for children under the age of 6 and $3,000 for children aged 6 to 16. Children aged 17 and 18 will score families a $500 credit, as will full-time college students aged 19 to 24 who are claimed as dependents.
Half of the Child Tax Credit will be paid out in monthly installments beginning in July, which means eligibility will be based on 2020 tax returns for most households. The other half of the credit will be claimed as an actual one-time credit when families file their 2021 returns. Previously, the Child Tax Credit could only be claimed on a tax return and paid out in a single installment (namely, as part of a filer's tax refund).
So how much money will the new credit put in your pocket? It depends on your income and the number of dependents you have. But as an example, if you're a married couple earning $150,000 and you have a 12-year-old and a 5-year old, you'll be entitled to a total of $6,600 ($3,600 for your younger child and $3,000 for your older one). You'll get $550 each month beginning in July through December, and then another $3,300 when you file your 2021 tax return.
Here's a table summarizing the new Child Tax Credit's value for easy reference:
|Child Age||New Temporary Child Tax Credit Value|
|6 to 16||$3,000|
|17 to 18||$500|
|19 to 24 and full-time student||$500|
Relief is on the way
Many families have struggled in the course of the coronavirus pandemic, and parents in particular have been burdened with extra childcare costs in the absence of full-time, in-person school. A boosted Child Tax Credit acknowledges these difficulties and should help a lot of families more easily cover their expenses. And while it's too soon to know if this expanded version will end up being a one-time thing or a permanent fixture, for now, a generous boost could work wonders for so many families in need.
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