When the American Rescue Plan was signed into law in mid-March, it did a lot more than just send stimulus checks to people’s bank accounts. It also boosted an essential tax credit, setting the stage for millions of families to get a financial boost.
The Child Tax Credit used to be worth a maximum of $2,000, and only $1,400 of it was refundable. That meant if a family claimed the $2,000 credit for a single child and owed no money to the IRS, the most that family could get back in refund form was $1,400.
For the current tax year, though, the Child Tax Credit is fully refundable, and it’s also worth a lot more money.
- The credit is increasing to $3,600 for children under the age of 6.
- It will be worth $3,000 for children aged 6 to 17.
- Children who are 18, as well as those aged 19 to 24 who are full-time students, will score their families $500 a piece, whereas the old Child Tax Credit didn’t apply to children above the age of 16.
Originally, the IRS had said that to claim the expanded Child Tax Credit, filing a tax return would be necessary. But now, it’s making that credit accessible to families who aren’t going to be filing a return.
A new portal will open soon
Not everyone is required to file a tax return. Lower earners, in fact, are often exempt from having to file taxes because their wages are lower than what the standard deduction pays (the standard deduction is a portion of earnings that’s exempt from taxes)…Read more>>