COVID relief bill would boost the child tax credit: Here's what it could mean for your family
Families could start receiving a higher child tax credit this year if the new COVID-19 stimulus package passes in Congress.
The American Rescue Plan Act is the latest $1.9 trillion COVID-19 relief package. It includes a provision that increases the child tax credit by at least $1,000 per child. And rather than having to wait for tax time next year, the money could be paid in installments of a couple of hundred dollars a month starting this summer.
Currently, parents can get a credit of up to $2,000 per child under the age of 16. Congress’s proposal increases that amount to $3,000, with children under the age of 6 eligible for $3,600 each. Children who are 17 years old are now also included in the credit.
“I always thought it should be 17, because most don’t leave the house until 18 to go to college,” says accountant Joseph Petrucelli with Petrucelli, Piotrowski & Co.
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Another change in the plan would be when parents get the money. Normally it would be a part of the once-a-year tax refund. But under the stimulus bill, parents would get half of the money in advance through monthly installments that would begin in July. The other half would be claimed on 2021 tax returns.
“Anytime we have the ability to get money back early is always better financially,” says Petrucelli.
The enhanced credit is income-based and would start to phase out for individuals who earn more than $75,000 per year or $150,000 for married couples who file their taxes jointly.
The proposal is just for this year. But some lawmakers do want to make it permanent.
The United States Senate has passed the bill. The House of Representatives now has to vote before it can go to President Joe Biden’s desk.