Now that the stimulus package has passed and everyone is awaiting their stimulus check, there is another set of questions on the mind…
What about the monthly cash payments for parents?
As you may know, when the House passed The American Rescue Plan, it included the extension of the child tax credit in the relief legislation.
The relief legislation expands the child tax credit to $3,000 annually per child aged 6-17 and to $3,600 for kids under 6 for single parents earning less than $75,000 annually, $112,500 for head of households, and $150,000 for married couples.
The current child tax credit is $2,000 per child under 17 for single parents or heads of household earning less than $200,000 or married couples making less than $400,000 annually so, benefits have increased quite a bit.
So, to know if you qualify, you want to look at your AGI (adjusted gross income) on your most recent tax filing status. Either 2019 or 2020 (although it almost entirely time to file 2020).
If you are under the income guidelines above, you will receive the full benefits.
So, how exactly will this work?
Well, nobody knows with 100% certainty.
Rumors have been that if the Treasury Department decides to disburse those payments monthly, it would provide a guaranteed income for families.
This would be in the form of $300 monthly checks per child under 6 and $250 monthly checks per child between 6 and 17 from July to December.
Parents who qualify would be able to collect the other half of the child tax credit when they file their taxes in 2021.
This means, if you have children ages 2, 6, and 10. You will qualify for $9,600 total.
If payments begin in July, that would mean, from July to December, you’d receive monthly payments of $800 ($300 for the 2 year old, $250 each for the 6 and 10 year old).
The other half would then be a tax credit on your 2021 taxes.
So, while we don’t know fully how they intend to do it, we do know it’s coming to help parents who could really use the support right now.