Here’s who qualifies for the new $ 3,000 child discount

On Wednesday, House lawmakers sent the US $ 1.9 trillion Rescue Plan Act to President Joe Biden’s office, which promises to provide a significant financial boost to millions of American families.

In addition to incentive checks of $ 1,400 and improved unemployment benefits, the package includes updates to the current tax credit for children. In the 2021 tax year, under the new provisions, families will receive an annual benefit of $ 3,000 per child ages 6 to 17 and $ 3,600 per child under the age of 6. The credit is also fully repaid.

So who gets these new benefits? Millions more families. With this update, approximately 4.1 million children under the age of 18 will be directly affected and lifted out of poverty and an additional 5.75 million children will move closer to the poverty line, according to calculations by the Center for Budget and Policy Priorities. In total, about 27 million children, whether living in poverty or not, will benefit in one way or another from the fact that the credit is repaid in full.

Here you can see who is eligible for the new credit.

The child discount will be available for parents with children under the age of 18. This is the first time that parents with 17 year old children receive the tax credit. Families with children under the age of 6 receive a credit of $ 3,600 per child, while families with school-aged children receive $ 3,000 per child.

The full child tax credit is available to individuals making up to $ 75,000 and couples making up to $ 150,000.

From there, the credit is reduced by $ 50 for every additional $ 1,000 of adjusted gross income earned. That means, for example, that the $ 3,000 credit provided to parents of a child ages 6 to 17 will be completely eliminated for those who earn $ 95,000 and those who make $ 170,000 who apply jointly.

Families who do not qualify for the new $ 3,000 credit because they earn a higher AGI can still claim the $ 2,000 per child tax credit, which is available to individuals earning up to $ 200,000 ($ 400,000 for married couples who submit an application jointly).

The American Rescue Plan Act also extends children’s tax credit to U.S. territories and allows families in Puerto Rico to apply directly to the IRS to receive the credit.

It is fully refundable. What does that mean? Right now, if the tax credit exceeds their taxes due, they can only get back up to $ 1,400 as a refund. Under the new rules, they could receive the full $ 3,000 or $ 3,600 per child, depending on the age of the child.

You don’t have to be employed to get itThe new provision allows households without income to claim the credit. This is a big change, as previous rules limited credit to those who made at least $ 2,500. In the past, very low-income families were not given full credit.

Americans could receive benefits this summer. The IRS could begin providing advances on 2021 credit through periodic payments of $ 250 to school-age children from July 2021, depending on what the Treasury Department determines is workable. Under the proposed schedule, which could be as frequent as monthly, families could receive half of their total 2021 child tax credit this year and claim the remaining amount on their 2021 tax returns.

It’s just a temporary increase. The legislation passed by the House of Representatives on Wednesday only guarantees the increase for the 2021 tax year. But some Democrats, including Senators Sherrod Brown, D-Ohio, and Michael Bennett, D-Colo., Promised to push Congress to do so. make increased tax credit for children permanent.

“I think there will be broad support for it, and we will have to find a way,” said Bennett.

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