Eligible families can claim a tax credit of up to $2,000 per child under the age of 17 who is a U.S. citizen. The loan amount was reduced by $50 per adjusted gross income of $1,000 by more than $200,000 for lone parents and $400,000 for married couples. Families who owed little or no income tax could receive cash of up to $1,400 per child, a feature that made the tax credit only partially refundable. Credit expansion has been popular with Both Democrats and Republicans, in part because support for low-income and middle-class families with children is seen by members of Congress as both politically appealing and economically prudent. The loan has its roots in a 1991 report by a nonpartisan National Commission on Children that stated that “it is a tragic irony that the world`s richest nation is abandoning so many of its children” and recommended a repayable credit of $1,000 for all children up to the age of 18. A version of the loan was proposed by Republicans in their 1994 treaty with America and by President Clinton in 1995, and finally signed into law in 1997 as a $500 per child non-repayable loan for middle- and middle-income families. State and local governments can use ARPA funds to help families navigate and apply for federal, state, and local public benefits, including the federal children`s tax credit. The Ministry of Finance has issued preliminary final regulations governing the use of ARPA`s national and local fiscal stimulus funds to support navigators for public services and additional resources. Families do not have to wait to file their tax return to benefit from the credit. In July 2021, the Internal Revenue Service began making monthly payments – up to $300 per month for each child under the age of 6 and up to $250 per month for each child between the ages of 6 and 17.
Payments in November 2021 amounted to approximately $15 billion and went to 36 million families. Seven states have issued a child tax credit in addition to the federal loan. Four of the seven states (California, Colorado, Maryland and New York) have made the child tax credit refundable. California, Idaho, Maine and Maryland have set a fixed tax credit limit ranging from $205 to $1,000 per eligible child. Colorado has developed a tiered system based on income level and calculated as a percentage of the federal child tax credit. This updated interactive tool estimates how much people can expect from these four credits in the 2019 tax year, based on their tax filing status, the number of children and annual work income. The additional graph below the interactive table shows on a smaller scale the two credits to which people without children may be eligible – the federal EITC and the CalEITC. The TCJA has also created a credit balance of $500 that is available to all dependents who are not entitled to the $3,600 or $3,000 credits for children under the age of 18 (or, under previous legislation, the $2,000 CLC for children under the age of 17). Prior to 2018, these individuals would not have been eligible for a CBA, but would have been eligible for a dependant exemption, which was eliminated by the Tax Cuts and Employment Act (IJAA) of 2017. Dependents eligible for this loan include children aged 18 (and 17 under the rules of the TCJA) and children aged 19 to 24 who have been in school full-time for at least five months of the year. Dependent seniors (who make up about 6% of CTC-eligible dependents), as well as some children who are not U.S. citizens, are eligible for the $500 credit, which is labeled as another dependant credit on tax forms (Figure 1, yellow line).
$۱,۰۰۰ for each eligible family with an income of less than $25,000, reduced credit of less than $1,000 for each eligible family with an income between $25,000 and $30,000 The American Rescue Plan has asked the Internal Revenue Service to provide families with half of the repayable loan in the form of regular upfront payments – starting in July 2021 – instead of a lump sum, when taxpayers file their tax returns. The regular supply of a portion of the expanded CTC in 2021 (as opposed to the 2022 tax season) is expected to reduce child poverty from 13.7% to 11.3% (Wheaton, Minton, Giannarelli and Dwyer, 2021). During the COVID-19 pandemic, many low- and middle-income families experienced unemployment and lack of childcare facilities, exacerbating economic hardship. The American Rescue Plan Act of 2021 (ARPA) extends the tax credit for children from $2,000 to $3,600 per child under the age of 6 and $3,000 per child up to age 17 (instead of the previous limit of 16). The amount of the expanded benefit will gradually decrease for individual applicants earning more than $75,000 per year and married couples earning more than $150,000 per year. The ARPA temporarily makes the tax credit fully refundable and pays half of the total credit in monthly payments for the first six months, rather than once a year. The federal child tax credit will be reduced to the previous payment level for the 2022 tax year, unless it is renewed by Congress. The Child Tax Credit, which has been significantly expanded by Congress since it came into effect nearly 25 years ago, is an important part of the federal government`s efforts to help families with children. Congress significantly expanded it when it passed President Biden`s U.S. bailout in March 2021.
Only U.S. citizen children are eligible for these benefits. The loan expires in two stages…