President Joe Biden signed the $1.9 trillion Covid-19 relief package into law Thursday afternoon. Under the American Relief Plan Act, "the average benefit will be about $6,300," for families, according to Elaine Maag, a principal research associate at the Urban-Brookings Tax Policy Center, who cited the center's recent report.
The relief bill, which includes another round of $1,400 stimulus checks, also includes tax breaks designed to help more families cope with the pandemic. Stimulus checks could start hitting bank accounts "as soon as this weekend," White House Press Secretary Jen Psaki said during a press conference Thursday. The bill will also deliver an advance on tax credits directly to American families in the next few months.
Here's how much money families could receive from three of the proposals in the American Rescue Plan recently signed into law.
One of the American Rescue Plan's measures is the expansion of the Child Tax Credit. The package institutes a fully refundable Child Tax Credit for 2021 and increases the maximum amount to $3,000 per child ages 6 to 17 and $3,600 annually for children under the age of 6.
This is a major increase from the prior Child Tax Credit, which only provided an annual maximum of $2,000 per child from birth through age 16.
When Democrats introduced the plan, they outlined a proposal to send the cash out to families monthly. The timeline for sending money out is still unclear, but experts believe the credit would reach families this summer.
"The intent is certainly to try to deliver at least a portion of the Child Tax Credit in 2021 rather than when you file your 2021 return, so my guess is they hope to get half of your CTC to you in 2021 and half would come when you file your tax return," next spring, says Maag.
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The change in tax law means many more Americans would receive aid. "We estimate that the proposal would increase the Child Tax Credit for three-quarters of all families," says Maag.
The credit outlined in the bill is temporary and would only allow eligible families to claim the additional cash for 2021.
Use the calculator below to find out how much your family could potentially get.
The American Rescue Plan also includes a refundable Child and Dependent Care Tax Credit, which could help Americans claim thousands of additional dollars to offset the costs of child care.
The plan would provide a credit of up to $4,000 for one child or $8,000 for two or more children. Previous IRS limits were $3,000 and $6,000, respectively. To qualify, you must pay for child care in order for you and your spouse to work, and your child must be under the age of 13.
Families making less than $125,000 per year would be entitled to the full credit, while families making between $125,000 and $400,000 would receive a partial credit.
The fact that the tax credit is refundable "will allow access to very low-income families" and help make sure even those who don't owe a lot in taxes can benefit, says Maag.
More American families may also benefit from changes in dependent eligibility now that a third round of stimulus checks have been approved.
Unlike with previous checks, the American Rescue Plan makes dependents over age 16 eligible for aid. That means parents or caretakers who claim a dependent on their taxes who is older than 16 would receive a check for $1,400 per dependent.
The full per-dependent check will only be paid out to families who qualify based on their adjusted gross income reported on their most recent tax return.
Individuals with up to $75,000 in adjusted gross income will qualify for full payments, as well as heads of household earning up to $112,500 and married couples who file jointly with up to $150,000.
The checks would be reduced for incomes above those thresholds, and capped at $80,000 in income for single filers, $120,000 for heads of household, and $160,000 for joint filers.
Expanded eligibility could mean 26 million more people would be entitled to a payment, according to an estimate from the American Enterprise Institute.
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