The House of Representatives on Saturday passed the $ 1.9 trillion Covid-19 aid package, which included a temporary increase in the child discount.
The American Home Rescue Plan increases child tax credit for 2021 to $ 3,000 per child ages 6 to 17 and $ 3,600 per year for children under age 6. The increased payments, which apply specifically to teens who are 17 for the first time, would begin to taper off for individuals making more than $ 75,000 a year or $ 150,000 for married couples filing jointly.
There is already a child tax credit of $ 2,000 per child. When Americans file their tax returns, they can claim the credit for children under age 17. Current credit is based on income, so those who earn more than $ 200,000 ($ 400,000 for married couples filing jointly) will see the amount of their credit gradually disappear. If the tax credit exceeds their taxes due, they can get up to $ 1,400 back as a refund.
The House bill passed Saturday would increase the amount of credit by $ 1,000 ($ 1,600 for those with children under the age of 6) and allow the taxpayer to get the full amount back by 2021. Families Not Eligible For the new $ 3,000 credit due to higher adjusted gross earnings could still claim the $ 2,000 credit per child. Additionally, the plan would make the credit payable in monthly installments of $ 250 and $ 300, respectively, instead of just once a year.
“The coronavirus pandemic not only shed light on child poverty, it exacerbated it, reinforcing the need – and urgency – to expand and improve tax credit for children,” said Rep. Rosa DeLauro, D-Conn., In a statement. “We have known for a long time that this change would drastically reduce child poverty, with lasting benefits for children and their families.”
According to the Center for Law and Social Policy, the American Rescue Plan’s changes to the tax credit for children will reduce child poverty by about half. According to CLASP, poverty among black children is expected to fall by 52%, while that among Hispanic children is expected to fall by 45%. “If made permanent, these improvements will have positive effects for multiple generations,” the organization said in a statement.
Under the new provision, the Treasury Department could provide upfront payments up to half of the 2021 child rebate from July based on household tax return data for 2019 or 2020. If the credit is overpaid, those less than $ Earning 40,000 ($ 60,000 for couples applying jointly) would not repay the amount, nor would wages be seized.
Several Democrats, led by DeLauro, supported a proposal that would make the improved payments permanent, but the language did not make it to the final version of the House law.
Additionally, Senator Mitt Romney, R-Utah, last month proposed a similar tax credit that is slightly more generous for younger children (yields up to $ 4,200 per year for children under 6) and lasts longer than the proposed child credit as part of the $ 1 , 9 trillion aid package. However, to offset the cost of the increased tax cuts, Romney’s plan suggests scrapping a number of other family-oriented programs and credits.
The House version of the US bailout now goes to the Senate, which is expected to vote on the package before March 14.
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