Change to child tax credit: Millions of parents will get monthly allowance
INDIANAPOLIS (WISH) — The COVID-19 relief package signed into law this week marks an historic expansion of the child tax credit.
The annual tax credit of up to $2,000 per child will increase to $3,600 per child for children younger than 6, and $3,000 per child for those from 6-17. Kids who were 17 at the end of the 2020 tax year also now qualify; they were previously excluded. Families also can now receive the child tax credit as a monthly payment.
“Let’s say you have two children that are under age 6,” said Michael Jamison, OnTarget CPA president. “You’ll get your $300 per month per child so you’ll get $600 per month July through December.”
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The remainder can be claimed on your 2021 tax return.
“So, when you have a $3,600 tax credit, if you did not receive the advanced payment, you get the full $3,600 credited to your tax refund,” Jamison said.
People who earn up to $75,000 and couples earning up to $150,000 may qualify for the new expansion of the child tax credit. From those pay points, the credit will be reduced by $50 for every additional $1,000 of adjusted gross income earned.
The credit expansion is only expected to last for the 2021 tax year.