Millions of Americans have already received their third stimulus check, with millions more expected to receive their money later this week. While $1,400 will certainly help individuals pay for rent and other expenses, President Joe Biden’s $1.9 trillion relief bill also expanded the child tax credit for parents.
The expanded child tax credit will provide more than just $1,400 per child. In fact, it will provide up to $3,600 per child.
These payments will not only help parents take care of their children during these difficult times, but according to a report from the Center on Budget and Policy Priorities, they will reduce child poverty by 40%.
Here’s everything you need to know about the tax credit, how much parents can receive, and what it may mean for your family:
How Much Will Parents Receive?
For parents and caregivers, this tax credit will help them significantly reduce their tax bill. Prior to the signing of the bill, the child tax credit was a $2,000 credit parents could claim on their taxes for every child under the age of 17.
But, under President Biden’s plan, families with children will receive more relief in 2021. The tax credit has increased from $2,000 per child to $3,600 for children under six years old and $3,000 for children older than six years old.
The credit will be split — half will be paid through the tax refund and the other half will be given out monthly from July to December.
Are You Eligible?
While families with children under the age of 17 will receive the most credit, parents with children over the age of 17 are also eligible for partial credit. Families with children aged 17 or 18, or full-time college students between 19 and 24, can claim $500 per child.
Single individuals who earn up to $75,000 and married couples who make up to $150,000 can receive the full $3,000 or $3,600, depending on how old their children are.
However, higher-income families may receive a reduced credit. Married couples with an adjusted gross income under $400,000 are eligible for the $2,000 amount, as well as individuals who make under $200,000.
Will It Be Based on Your 2020 Tax Return?
The IRS will be judging if people are eligible based on their 2020 tax return, that is as long as it gets processed by July 2021. However, if an individual has received a 2020 tax return extension, the government will use their 2019 tax return.
This tax credit is expected to just be a one-year situation and will only last through 2021. However, Democrats are hoping to make it a permanent situation for families moving forward.