Stay updated on the latest developments regarding the $1,400 per person and $3,600 Child Tax Credit (CTC) payments introduced by the American Rescue Plan reported by Vibes. This crucial financial support is designed to assist American families. Learn about eligibility requirements and how to benefit from this significant aid.
Overview of the Child Tax Credit (CTC)
The Child Tax Credit (CTC) is a vital financial benefit established in 1997 to support families with qualifying dependent children in the United States. It aims to ease the financial burdens faced by households raising children.
Eligibility Requirements for the $1,400/Person and $3,600 CTC Payment
To qualify for the CTC, households must meet the following criteria:
- Each child must have a valid Social Security Number.
- The child must be under 17 years old before the end of the tax year.
- The child must have resided with the applicant for more than half of the year.
- The child must be an American citizen, national, or resident alien and must not have provided more than half of their own financial support.
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Differences Between the Original and Enhanced Child Tax Credit Under the American Rescue Plan
The American Rescue Plan of 2021 introduced significant changes to the CTC:
- Increased Credit Amount: The CTC was raised from $2,000 per child to $3,600 for children under six and $3,000 for children aged 6-17.
- Full Refundability: The CTC became fully refundable, allowing low-income families to receive the full credit even if they owed no taxes. Previously, the refundable portion was capped at $1,400 per child.
- Expanded Eligibility: The enhanced CTC included 17-year-olds for the first time and removed the minimum income requirement. The original CTC only covered children under 17.
- Monthly Advance Payments: Families received monthly advance payments from July to December 2021, covering half of the estimated CTC amount, instead of waiting until tax filing.
- Increased Phase-Out Thresholds: The enhanced CTC phased out at higher income levels: $112,500 for single parents and $150,000 for married couples, compared to $200,000 and $400,000 for the original CTC.
- Reduction in Child Poverty: The enhanced CTC contributed to a record-low child poverty rate of 5.2% in 2021, lifting millions of children out of poverty across various races and ethnicities.
Changes to the Child Tax Credit (CTC) for 2024
Initially set at $2,000 per child with a refundable amount of $1,400, the CTC underwent significant updates:
- In 2021, the CTC was increased to $3,600 for children under six and $3,000 for children aged six to seventeen, with the full amount refundable.
- In 2022, these enhancements were reverted to prior levels.
- For the fiscal year 2024/25, adjustments are expected under the proposed Tax Relief for American Families and Workers Act of 2024, including:
- A gradual increase in the maximum refundable amount to $1,900 in 2024.
- An increase to $2,000 in 2025.
Resources for Families Seeking Help with the Child Tax Credit
Several resources are available to assist families with the Child Tax Credit application process:
- ChildTaxCredit.gov: Managed by the U.S. Department of the Treasury, this website provides information on:
- How to receive the Child Tax Credit
- The workings of the Child Tax Credit
- Eligibility criteria
- Assurance that the credit does not affect federal benefits
- GetCTC.org: Created in partnership with Code for America, the White House, and the Treasury Department, this mobile-friendly tool (currently closed for the season) offers guidance in English and Spanish for claiming the CTC.
- IRS Non-Filer Tool: Allows families who do not typically file taxes to register quickly for the CTC.
- IRS Child Tax Credit Portal: Provides status checks on enrollment, the option to opt out of advance payments, and the ability to update bank account information.
- IRS Child Tax Credit Eligibility Assistant: Helps families determine if they qualify for advance payments.
Income Guidelines for the American Rescue Plan Benefits
To qualify for benefits under the American Rescue Plan, households must meet the following income criteria:
- Single Filers: Income must be less than $75,000.
- Joint Filers: Combined income must be up to $150,000.
- Heads of Households: Income should not exceed $112,500.
Payments phase out above these thresholds, with specifics as follows:
- Single filers: Payments phase out completely at $80,000.
- Heads of households: Payments phase out completely at $120,000.
- Joint filers: Payments phase out completely at $160,000.
Additional Information on Direct Payments
- Amount: An additional $1,400 per person, bringing the total payment to $2,000 per person when combined with the $600 from December 2020.
- Eligibility: College students and seniors claimed as dependents also qualify for $1,400 each.
What to Expect from the American Rescue Plan
The American Rescue Plan offers:
- Income tax credits ranging from $543 to $1,502 for individuals without children.
- The Child Tax Credit (CTC) benefits ranging from $2,000 to $3,000 for each child over the age of six, and up to $3,600 for children under six years old.
Stay informed and explore how the CTC can benefit you and your family in 2024.
This Article Includes
- 1 Overview of the Child Tax Credit (CTC)
- 2 Eligibility Requirements for the $1,400/Person and $3,600 CTC Payment
- 3 Differences Between the Original and Enhanced Child Tax Credit Under the American Rescue Plan
- 4 Changes to the Child Tax Credit (CTC) for 2024
- 5 Resources for Families Seeking Help with the Child Tax Credit
- 6 Income Guidelines for the American Rescue Plan Benefits
- 7 Additional Information on Direct Payments
- 8 What to Expect from the American Rescue Plan
