March 17, 2021 by Premium Mortgage Corporation
Overlooked Benefit in the New COVID Relief Bill If You Have Children and Make Less than $150,000:
On Wednesday, March 10, President Joe Biden’s $1.9 Trillion American Rescue Plan was House approved with a new approach on child tax credits for families. The new bill will increase the tax credit from the current $2,000 per child to a maximum of $3,600 per child.
Who is Eligible for the Child Tax Credit?
Families with children under the age of 17 can qualify for the tax credit. Most Americans would receive a $3,000 credit for a year for each child aged 6-17, and that credit is now fully refundable. For children under the age of 6, the credit may increase to $3,600. Eligibility for this credit has also been extended, addressing the previous year of lacking eligibility.
Why has Eligibility Changed?
Last year, it was estimated that the majority of children living in the bottom 10% of income were completely ineligible for the tax credit and the bottom 30% of income were only eligible for partial credit. Only about half of black and Latino children were eligible for the full credit.
When Does the Phase-Out Begin?
This revised credit will begin to phase out after exceeding these three thresholds: $75,000 for individual filers, $112,500 for head of household filers, and $150,000 for joint filers.
How Do I Apply?
There is no application necessary for this payment, however you must file your taxes using the guidelines posted in the Schedule 8812 (Form 1040) on the Child Tax Credit page.
If I Qualify, When Will I Receive My Payment?
Payments for the credit will be sent out periodically as opposed to one lump sum and could start as early as July of this year. Regularly occurring payments are to ease the day-to-day costs families may face during the pandemic.