The Child Tax Credit and COVID Relief Bill: How It Supports Families in Need
**Introduction:**
The Child Tax Credit (CTC) has long been a valuable tool for families to receive financial assistance for raising their children. However, in response to the economic hardships caused by the COVID-19 pandemic, the U.S. government has implemented significant changes to the CTC through the COVID Relief Bill. In this article, we will explore the details of the Child Tax Credit COVID Relief Bill and how it aims to support families during these challenging times.
What is the Child Tax Credit?
First, let’s understand what the Child Tax Credit is and how it has functioned in the past. The CTC is a tax credit offered by the U.S. government to eligible families with dependent children. It provides a certain amount of money that can be subtracted directly from the income tax owed. If the credit exceeds the amount of taxes owed, families may also receive a refund.
Previously, the Child Tax Credit provided up to $2,000 per qualifying child under the age of 17. However, many families with lower incomes did not receive the full amount, as it was partially refundable. This meant that families with little or no income tax liability could only claim a limited refundable portion of the credit.
The COVID Relief Bill:
The COVID Relief Bill, officially known as the American Rescue Plan Act of 2021, has sought to make significant changes to the Child Tax Credit to better support families facing economic hardships due to the pandemic. Let’s explore some of the key provisions of the bill:
Increased Child Tax Credit Amount:
Under the COVID Relief Bill, the Child Tax Credit amount has been significantly increased. For the year 2021, eligible families can now receive up to $3,600 per child under the age of 6 and up to $3,000 per child between the ages of 6 and 17. This increased amount aims to provide greater financial support to families struggling to make ends meet during these challenging times.
Expanded Eligibility:
The COVID Relief Bill has also expanded the eligibility criteria for the Child Tax Credit. In the past, families needed to meet certain income thresholds to qualify for the full credit. However, the new legislation has removed the minimum income requirement, ensuring that even families with little or no income can benefit from the expanded credit.
Advance Monthly Payments:
One significant change introduced by the COVID Relief Bill is the option for eligible families to receive monthly advance payments of their Child Tax Credit. Instead of waiting until tax season to claim the credit, families can now receive a portion of the credit in monthly installments from July to December 2021. These advance payments can provide immediate relief to families that need financial support throughout the year.
Temporary Extension:
The COVID Relief Bill has made the changes to the Child Tax Credit temporary and applicable only for the year 2021. However, there have been discussions about extending these changes or making them permanent to provide continued support to families in the long term.
Frequently Asked Questions:
Now, let’s answer some frequently asked questions regarding the Child Tax Credit and the COVID Relief Bill.
Q1: How do I qualify for the expanded Child Tax Credit?
To qualify for the expanded Child Tax Credit, you must meet the following criteria:
– Your child must be under the age of 18 by the end of 2021.
– You must have a valid Social Security number for your child.
– Your child must have lived with you for at least half of the year.
– Your modified adjusted gross income (MAGI) must be below the income thresholds specified in the legislation.
Q2: How will the monthly advance payments work?
If eligible, you can choose to receive monthly advance payments of your Child Tax Credit instead of waiting until tax season. The IRS will determine your eligibility based on your 2020 tax return or, if not available, your 2019 tax return. The advance payments will be automatically deposited into your bank account or sent as a check.
Q3: What happens if I receive advance payments but no longer qualify for the Child Tax Credit?
If your circumstances change and you no longer qualify for the Child Tax Credit or your income surpasses the eligibility criteria, you may need to repay some or all of the advance payments received. It is essential to promptly notify the IRS of any changes in your eligibility to avoid owing a significant amount during tax season.
Q4: Will the Child Tax Credit changes be extended beyond 2021?
While the changes introduced by the COVID Relief Bill currently apply only to the year 2021, there is ongoing discussion about extending and even making them permanent. Many policymakers recognize the value of providing continued support to families, and legislative efforts are underway to explore these possibilities.
Final Thoughts:
The COVID Relief Bill’s changes to the Child Tax Credit have the potential to significantly impact families across the United States. By increasing the credit amount, expanding eligibility, and providing monthly advance payments, the government aims to alleviate the financial burdens faced by families during these challenging times. It is crucial for eligible families to be aware of these changes and take advantage of the support they provide.
The Child Tax Credit COVID Relief Bill represents a step towards recognizing and addressing the struggles faced by families, ensuring they receive the necessary support to provide for their children’s well-being. As we look ahead, it is essential for policymakers to consider the long-term impact of such measures and continue working towards a more equitable society for all.