The Child Tax Credit Will Be Subject to 4 Major Changes.
The Child Tax Credit: According to the American Academy of Sciences, the United States Conference of Mayors, the National Urban League, economists, child advocates, and the chorus of other anti-poverty advocates, President Biden’s historic 1.9 trillion Covid-19 relief package is a “game-changer.” By this summer, an increased tax credit for low-and moderate-income families included in the plan could help the nation’s 11 million poor children.
The American Rescue Plan Act of 2021, passed by Congress this week, will be President Biden’s first major piece of legislation to be enacted. Starting this month, the Rescue Plan will distribute $1,400 one-time relief checks to individuals earning $75,000 or less per year, as well as $2,800 to low-and moderate-income couples filing joint tax returns.
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The Child Tax Credit Impact On Families
The impact of the bill on families, on the other hand, received far less attention. The US Rescue Plan-2021 includes a fully refundable child tax credit of $3,000 for children aged 6 to 17 years. The tax credit for children under the age of six was increased to $3600 this year. No matter how little money a family makes, they are eligible for a child tax credit.
Senator Ben Cardin of Maryland said this week, when the House of Representatives discussed the bill, that “the tax credit provides significant relief to families.”
“Emergencies like this (Covid-19) are when the government can best mobilise resources to make a positive difference in people’s lives. “The provisions in this bill for child tax credit will cut the child poverty rate by half,” Cardin said enthusiastically.
Parents used the child tax credit on an annual basis when filing their taxes. On the other hand, the US Rescue Plan-2021 includes a new provision for this year only, which aims to get money into the hands of families in need more quickly.
From July to December 2021, the IRS intends to send direct deposits to eligible parents with children. This would ensure that low-and moderate-income families receive assistance throughout the year.
Single filers earning up to $75,000, household filers earning 112,500 or less, and joint filers earning up to $150,000 will receive full tax credit advance payments. Parents earning more than this amount, up to $200,000 for single filers and $400,000 for joint filers, will see their payments gradually reduced.
For families with children, the current tax credit is $2,000 for children aged six to sixteen years and $3,000 for children under six years of age. In most cases, children under the age of 17 are not eligible for a child tax credit, but will be eligible in 2021.
After the Senate amended a number of key provisions in the original version of the legislation, the US House of Representatives passed the American Rescue Plan Act – 2021 for the second time on March 10. The original legislation, passed by the US House of Representatives on 26 February, called for an increase of $400 per month in the Federal Pandemic Unemployment Compensation (FPUC) until the end of August.
However, the final bill passed earlier this week kept federal unemployment benefits at $300 per month until September 6. The final bill also omitted President Biden’s controversial $15 federal minimum wage increase, which only received shaky support on Capitol Hill.
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In spite of the changes to the original legislation, Maryland Rep. Kweisi Mfume is grateful that the Congress has been able to provide tangible support. Rep. Mfume said, “We have worked on behalf of Marylanders and all Americans to help save lives and protect livelihoods.”
“While the infection rates of COVID-19 have stabilised, the pain and suffering of our families is not there. Too many Marylanders are still dying as a result of the virus, unemployed, hungry, and on the verge of eviction. Mfume said, “I am proud of the commitment we have made to help families meet their ends.”