SAVANNAH, Ga. (WSAV) – The Biden Administration is making a nationwide push to ensure Americans know about the the expanded child tax credit that will soon be coming their way. It’s part of the American Rescue Plan that increases the amount families can get per child and allows many more people to qualify for the credit.
“It’s free money, it’s not taxable, there’s not a catch,” says Greg Nasif from the non-profit Humanity Forward. The group has advocated for the new credit which Nasif says is more like a benefit.
“I think for 98 percent of Americans, they’re going to get the full amount of the benefit and they won’t have to pay anything back,” said Nasif. “The money starts in July in the form of IRS payments. For most folks it will be deposited directly into their bank account, they won’t have to do anything.”
The money can come in the form of montly payments for the rest of 2021 and a lump sum payment in 2022 will provide the last part of the credit.
The good news for many low income parents is that they now qualify for the credit. Prior rules said only people who made enough money to have to file taxes could be considered for the credit.
“This is a very special gift from the government, it’s called a fully refundable tax credit,” says Bill Dendy, who is an attorney, a CPA and a financial planner.
He says those who have not filed taxes in recent years need to register with the IRS so the agency will know where to send the monthly checks.
The new credit amount is $300 per child (under age 6) and $250 per child (from age 6 to 17.)
“For those with younger children we’re looking at $3,600 (one year of the credit) and for those with kids 6 to 17, we’re looking at an additional $3,000 (one year of the credit) of free money. So that can be mean a whole lot for a family,” said Dendy.
Dendy also says this isn’t just for the low income, i.e. a single parent who makes $75,000 and a married couple that makes $150,000 still qualify for the new amount.
He also told us that for those making more than that the old child care credit (up to $2,000 per child) is still available. He says a single filer making up to $200,000 and a married couple making $400,000 would qualify for that lower amount.
The Administration says the American Rescue Plan will lift half of America’s children out of poverty and the IRS estimates up to 39 million parents will qualify.
For parents who may not need the extra monthly checks, Dendy urges them to take the credit in a lump sum in 2022.
“If they can wait and take that additional money all at once, it will be thousands and that may allow parents to do something meaningful for the family,” said Dendy.
Dendy says the credit will allow families with children to get help right away and “for the economy, we’re going to see those dollars go to work immediately and that’s beneficial.
However, Dendy also says look for debates about whether the extra spending will increase inflation in the emerging post COVID economy.
“This is money for raising, children,” said Nasif. “I think for some people this seems too good to be true that you’re going to get support for raising children but this is true.”
Nasif says his organization is advocating for the tax credit to be extended past 2022. He also urges people who are not registered with the IRS to do so before July 15.
“It can make the very important responsiblity people have of raising children just a little bit easier and will give children better lives,” said Nasif.