The administration and congressional Republicans have a new proposal to help working families. Under this plan, the Child Tax Credit would be increased to $3,000 per child in 2021 and $3,600 per child in 2022.
This would make the Child Tax Credit more generous than it is now — which is already pretty good! The current credit allows families who earn less than $110,000 (or $300,000 for married couples) to receive up to $2,000 per qualifying child each year without paying any taxes.
If you make more than that threshold but less than 400k/yr then you may not get any money either but if your household income is below 200k/yr then there’s an opportunity for you to get some payments from the IRS starting next year!
Stimulus Check: Will The Child Money Continue?
One of the most popular tax credits, the Child Tax Credit (CTC), is currently worth $2000 per qualifying child.
The CTC is a refundable credit, meaning that if you exceed your tax liability and receive a refund with your return, part of your refund amount is directly linked to how much you earned in CTCs. The CTC can also be non-refundable under certain circumstances.
The current income thresholds would remain unchanged. You can earn up to $200,000 as a married couple and still get the full $3,000 per child.
This is a significant change from the tax law passed in 2018, which reduced the maximum credit from $3,500 to $1,600 for those who earned more than $400,000 per year. The new version of the Child Tax Credit would be for dependent children under 17 (as opposed to the existing credit for those under age 18).
The Child Tax Credit is a nonrefundable credit that offsets the cost of raising children. Currently, families can receive $2,000 per child under the age of 17 ($1,400 for each child if their income is less than $200,000). This proposal would see the Child Tax Credit increase to $3,000 per child in 2021 and $3,600 per child in 2022.
However, this deal does not include any expansion to other tax credits or deductions that exist for parents and families. In other words, parents who don’t qualify for the CTC will not benefit from these changes at all.