The American Rescue Plan Act of 2021, the Biden administration’s recently passed Covid-19 relief bill, offers immediate stimulus payments of up to $1,400 for many tax payers (you might have already received yours!). But the plan also includes a larger benefit for families with children. Here’s what you need to know:
What’s the deal with the new Child Tax Credit? The new relief bill expands the Child Tax Credit, offering families payments of up to $3,000 per child under 17 (and $3,600 for each child under 6). Individuals earning up to $75,000 a year (or married couples filing their taxes jointly who earn up to $150,000 a year) will receive the full payment. The amount will be phased out gradually for families earning more than that. You can use this calculator to figure out how much you’ll receive based on your income and your family composition.
When will I get the money? It’s a little unclear, but families could start receiving their credit in monthly installments as soon as July. Whatever credit remains at the end of the year will come back to families on their tax return.
What effect will this have? The new tax credit will lift about 4.1 million children above the poverty line this year. All together, 27 million children and their families will benefit.
Will it last forever? At the moment, this expansion is only for the 2021 tax year.
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