WASHINGTON – The new $1.9 trillion stimulus bill cleared its final hurdle, passing the House early Wednesday afternoon.
With it comes new tax credits for families, that increase the current $2,000 child tax credit to $3,000 for each child between ages 6 and 17. For children under 6, it’s $3,600 per child. It’s projected to cut child poverty nearly in half in a single year.
“The expansion will not affect 2020. There’s still a $2,000 credit available for folks for 2020. But what we’re talking about now is for 2021,” said Bill Bloss with RLB Accountants in Allentown.
The stimulus package allows half of the new credit to be paid out monthly from July to December as an advance of your 2021 taxes. The rest of the credit you can claim when you file for 2021.
“They can file their tax return – in this case April of ’22, and get any remaining balance that they’re owed,” Bloss said.
You no longer have to be employed to claim the credit either.
The money starts to phase out for individuals making more than $75,000 and married couples making $150,000, although some Democrats in Congress are calling that unfair to single parents since child care costs are the same regardless of one’s marital status.
For now, the tax credit will only apply for 2021, but President Biden and others are already talking about making this provision – and others – permanent.
“We need to be prudent, we need to be careful, we need to support those that need the assistance, but don’t overdo it either,” said former Republican Congressman Charlie Dent. “Just to say we’re going to take these provision that have been enacted in this bill – that we were told was needed as an emergency – and, now, we’re going to make them permanent. I think that’s a bit disingenuous.”
Republican Senator Mitt Romney has his own proposal to do something similar with the child tax credit. That proposal would actually pay out more.
“Some of these provisions may be worthy of extension, but that should be a separate debate on a separate day,” Dent said.
President Biden is expected to sign the bill on Friday.