On March 11, 2021, The American Rescue Plan was signed by President Biden granting relief to families. The legislation was passed by Congress with a provision that expands the child tax credit for one year.
For 2020 tax returns, the child tax credit is $2,000 per child under the age of 17. A child under the age of 17 can be claimed if he or she is your dependent residing with you and has a Social Security number. The credit begins to phase out if your adjusted gross income is above $200,000 for individuals and $400,000 for couples.
The American Rescue Plan temporarily expands the child tax credit for 2021 with several changes. The credit increases to $3,000 per child ages 6 to 17 and $3,600 per child under the age of 6. Dependents 17 years old now qualify for the child tax credit that is fully refundable. Previously, low-income individuals with children had to have an earned income of at least $2,500 to get a refund, that has been waived. And lastly, half of the child tax credit can be received in advance. The IRS has been authorized to send monthly payments to eligible families from July 2021 to December 2021. If families do not opt out, payments would account for half of the family’s child tax credit for 2021 and claim remaining amount on their 2021 tax returns.
Visit our website www.preminsure.com to schedule a complimentary appointment to process your tax return online. You can contact our office at 713-926-4233 for further assistance.