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Although it is still subject to changePresident Biden’s $ 1.9 trillion stimulus package includes a provision that would temporarily increase the child tax credit from $ 2,000 to $ 3,000 per child ($ 3,600 for children 5 and under) for the tax year 2021. It would also allow periodic payments of “family allowances” to families from July to December. Half of the total credit amount would be prepaid with the periodic payments, while the other half would be claimed in the tax return you file next year.
However, not everyone would get the extra amount as part of the President’s plan. And some families would not get any credit (or periodic payment) at all. This is because the credit would be reduced – or even eliminated – for people whose income exceeds a certain amount. In fact, there would be two “phase-out” rules in play – one for the extra $ 1,000 (or $ 1,600) and one for the remaining credit. This makes calculating total credit and periodic payments very tricky.
The massive stimulus package has already been passed by the House and is expected to be approved by the Senate as well (albeit with some modifications). But if you don’t want to wait until the final pass to see how much money you would make, answer the four calculator questions below and we’ll give you a personalized estimate of how much you would receive up front from July to December. (assuming monthly payments) and how much you could claim as a child tax credit on your 2021 tax return. child tax credit proposal may change before final adoption, which could then affect the amount you receive. But, for now, you can use the tool to see where you are in the current plan.
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Current amount of the child tax credit
The current child tax credit is $ 2,000 per eligible child. It is being phased out (but not below zero) for joint filers with Adjusted Gross Income (AGI) of $ 400,000 or more and for other taxpayers with AGI of $ 200,000 or more.
Proposed elimination scheme
As part of the plan adopted by the House, the 2021 increase (c. Continued. However, the increase cannot be reduced below zero (other limitations to this reduction would also apply).
Once any reduction in the increased credit amount is calculated, the current phase-out would then be applied to the remaining credit amount. Thus, for co-filers with an AGI of $ 400,000 or more and for other taxpayers with an AGI of $ 200,000 or more, the credit would be subject to a further reduction – perhaps up to $ 0.
Periodic payments offered
Once the amount of the credit was determined, 50% of it would be paid in advance with periodic payments under the House bill. But these periodic payments would only work from July to December 2021. (We expect monthly payments, but prepayments could be based on a different schedule.) The remaining 50% would be claimed as a credit on the taxpayer’s 2021 tax return. .
The IRS would also be required to create an online portal so that people can update their income, marital status and the number of eligible children. You can also use the portal to turn off recurring payments if you want to use the full child credit on your 2021 return instead.
For more on the proposed child tax credit plan, see The House Approves $ 3,000 Child Tax Credit for 2021.
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