Americans have started receiving their stimulus checks, but expanded Child Tax Credit payments won't start going out for four months.
The American Rescue Plan expanded a number of tax benefits, including one that provides payments to parents for each child they have. Instead of receiving $2,000 per child, eligible parents will receive $3,600 for every child under 6 and $3,000 for every child over 6 and under 18.
To be eligible for the full expanded payments, individuals must have adjusted gross incomes up to $75,000, $150,000 in the case of a joint filer. For every $1,000 that a person's income exceeds the threshold amount, the credit will be reduced by $50.
The Child Tax Credit isn't new, but instead of people receiving it in a lump sum when they file their taxes, taxpayers will receive advanced periodic payments. Beginning in July, eligible taxpayers will periodically receive payments equivalent to 1/12 of their total credit per month.
The hope is that the payments will be done on a monthly basis, although it's not outlined in the package. Those payments will continue through December, and the other 50 percent of the credit will be paid when a person files taxes in 2022.
Along with increased payments, some taxpayers won't have to pay back any advance amount they receive that's more than what they're due. Individuals with incomes below $40,000, and joint filers with incomes below $60,000, will be exempt from repaying any overpaid amount.
Individuals with incomes between $40,000 and $80,000, and joint filers with incomes between $60,000 and $120,000, will need to repay only a portion of the overpayment. Individuals and joint filers with incomes above those amounts will need to repay all overpayments when they file their 2021 returns.
Payments will be determined based on a taxpayer's most recent filing information, as well as any information provided via an online portal that will be set up. Relevant information that needs to be provided is any change in the number of qualifying children, marital status and income.
Those who aren't eligible for the expanded Child Tax Credit but meet the income thresholds for the normal credit can still claim it on their return. Ordinarily, individuals with incomes below $200,000, or joint filers with incomes up to $400,000, can claim a $2,000 credit for each eligible child below 17.
The American Rescue Plan, which President Joe Biden signed into law last week, keeps the changes in place for just one year, but some lawmakers are looking at making the change permanent.
"The president wants to make the Child Tax Credit permanent," White House press secretary Jen Psaki said. "But we just have to find a vehicle, and we're having those discussions with Congress."
Uncommon Knowledge
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