‘Every bit helps a family’: A breakdown of the increase in child tax credit under the American Rescue Plan

March 11, 2021 7:01 PM

Elenee Dao,

Posted: March 11, 2021 7:01 PM

by Elenee Dao

SPOKANE, Wash. — In addition to the anticipated $1,400 stimulus checks for Americans, families with kids will get more money through the child tax credit under the American Rescue Plan.

Families with more kids will get more money. The American Rescue Plan came with many changes to the child tax credit. It’s a trickle effect. More money means families could afford child care, which then means more people can finally head back to work.

“Everybody wants the best for their child,” said Lee Williams, the CEO of Community-minded Enterprises, which has some child care programs.

The best for a child means being able to provide for them. An extra $1,000 can do that, and some may be getting even more.

“Every bit helps a family,” said Williams.

In the massive American Rescue Plan, the child tax credit is increasing and expanding.

In the previous policy, families could get up to $2,000 per kid, up to 17 years old.

Now, families with kids under the age of six can get $3,600 per child. Families with kids between the ages of six to 18 can get $3,000 per child.

However, it’s not quite as universal though.

“It’s also important to note not everyone is going to get the step up in the credit,” explained Mike Whitmore, with HMA CPA.

The credits will be based on income.

The full credit will be allowed for single parents making up to $75,000 and couples up to $150,000. For anyone above that threshold, the money will phase out by $50 every additional $1,000 that’s made.

These aren’t the only changes either.

People who don’t make enough money to pay taxes can get child tax credits now. Before the American Rescue Plan, families who made at least $2,500 were able to get a tax credit. That’s been eliminated.

“In the past, the parents had to have an earned income to get the child tax credit. They actually got rid of that, which i think will include a lot more families in this,” Whitmore said.

According to the Institution of Taxation and Economic Policy, roughly 83 million kids will benefit from this plan. It can also ease the burden on parents.

“It doesn’t sound like a lot, but when it translates itself to maybe, ‘I can pay for part of my child care or all of my child care for a month.’ That has a huge impact,” Williams said.

Another new change with this child tax credit plan – families could get monthly payments.

Families who are eligible to get the $3,000 or $3,600 could get half of it paid monthly starting this July. However, the details on how this will happen are still unclear.

The credit is also refundable, whereas only parts of it were in the past, Whitmore said.

While it’s a win for some families right now to get between an additional $1,000 or $1,600, it is only currently for 2021. Both Whitmore and Williams say there is a push to make it more permanent.

“The work absolutely doesn’t stop here. It’s just beginning here,” Williams said. “What we need to do is we need to advocate for it to last longer than that. That, if this is an important thing to do, this is an important thing to do ongoing.”