President Biden has unveiled his reformed child tax credits which will see American families paid up to $3,600 to help raise each of their...
President Biden has unveiled his reformed child tax credits which will see American families paid up to $3,600 to help raise each of their children.
The raise, unveiled as part of Biden's $1.8 trillion American Families Rescue Plan, will see families with children aged under six receive a monthly payment of $300 per child - equivalent to $3,600 - in 2021.
Families with children aged between six and 17 will receive $250 a month, or $3,000 over the course of a year.
Cash will automatically start hitting the bank accounts of families who have filed 2019 and 2020 federal taxes from July 15. Eligible families previously reclaimed the tax credit back when filing their annual taxes.
The initiative is intended to run for a year, and is intended to lift millions of children out of poverty, with Biden has spoke of extending it to 2025, and hopes it could be made permanent.
Child tax credits were previously capped at $2,000 per child per year. The Biden administration's raise represents an 80 per cent boost for children under six, and a 50 per cent increase in the child tax credit paid out to parents of children aged between six and 17.
Two parent families on a combined salary of up to $150,000 are eligible for the tax credit. Families with a single 'head of household' being paid up to $112,500 a year are also included. A head of household is an unmarried person who covers more than half their family's living costs, and lives with them for more than half of the year.
Single parents on salaries of up to $75,000 will be paid the new credits too.
Parents will get half the credit they are eligible for in 2021, and will be able to claim the rest back when completing this year's federal tax return.
'We need to give ordinary families a break – a tax break – to help them with the cost of raising their kids,' Biden said during remarks from the White House on Monday
President Biden tweeted that a family with two children could now take in $500 a month in tax credits - although the White House website suggests it could be even more.
It gives the example of a two-parent family with two children under six, and says they will take home $7,200 a year - equivalent to $300 per month per child, up from the $4,000 a year they'd have received under the previous system.
There is no indication that there is a limit on the number of children parents will receive the cash for. It also appears that each child in a family is eligible for the full amount - regardless of how many kids there are in a family.
Vice President Kamala Harris hailed the enhanced program while visiting a recreation center in Pittsburgh, Pennsylvania, on Monday.
'When more families know about how they can get the relief, that is how we will be able to lift our children out of poverty,' Harris said.
Harris had previously been designated Biden's 'Border Czar' but had come under criticism from Republicans for failing to actually visit the southern border.
With the child tax credits, the administration launched a website with details for potential recipients.
The payments are to be made monthly, a first for the program. People can register for the program even if they did not fully file their taxes.
Usually, tax breaks for Americans with kids and dependents come one time a year – at tax times.
The White House offered these as examples of how the tax credits would work
'This tax cut will give our nation's hardworking families with children a little more breathing room when it comes to putting food on the table, paying the bills, and making ends meet,'
President Biden said in a statement on Monday. 'Nearly every working family with children is going to feel this tax cut make a difference in their lives, and we need to spread the word so that all eligible families get the full credit.'
The program is slated to expire after one year, though Biden has proposed extending it through 2025 with the ultimate goal of making it permanent.
The child tax credit payments, which will reach millions of American households, including 88% of children in the country, could have a lasting impact in reducing childhood poverty and boosting future earning potential a White House official said.
The expanded credits could cost roughly $100 billion a year.
Estimates from the IRS suggest that 39 million households accounting for nearly 9 in 10 U.S. children are already set to receive the payments.
Biden's program received widespread support - but some Twitter users condemned it as wasteful and unfair.
Keith McLendon wrote: 'Printing and giving away money is going to only increase inflation even more. I know you don't understand this but your handlers should...'
Matthew Woodworth said: 'Just not fair for the people who have no kids have don't get nothing while the people who have kids get extra plus they also got the last stimulus which is not fair at all.'
A user called Donkey Kong added: 'This free money is one of the lucrative reasons children are used as tools in disingenuous divorces. I can’t support these measures because of the abuse they are open to and for which nothing is done to protect children and wrongfully disenfranchised parents.'
And The Chefs Garden tweeted: 'Families that make a $150,000 a year get help Disabled that live on $10,000 a year get the shaft.'
President Biden shared this tweet hailing the new program - although the White House website suggests a family with two children could receive more than the above message suggests
The American Rescue Plan, signed by Biden in March, allows child tax credits of up to $3,600 per year to be distributed in monthly payments instead of annually for each child of couples earning under $112,500
Vice President Kamala Harris visited a summer classroom at Brookline Memorial Recreation Center, on Monday in Pittsburgh. She also talked about the new child tax credits during her visit
'The American Rescue Plan is delivering critical tax relief to middle class and hard-pressed working families with children,' the White House wrote in a statement on the news Monday. 'With today's announcement, about 90% of families with children will get this new tax relief automatically, starting in July.'
More than 65 million children nationwide – nearly 88 per cent of Americans under 17 – are set to receive the benefits without their parents needing to take any additional action.
This year, couples earning $150,000 or less can receive the full payments on the 15th of each month, in most cases by direct deposit, but some by paper check or debit cards. The highest benefits total $3,600 annually for children under 6 and $3,000 for those who are older.
The benefits diminish for individuals whose adjusted gross income is more than $75,000 or couples earning more than $150,000 – and the highest-income parents will receive none at all.
The IRS will determine eligibility based on the 2019 and 2020 tax years, but people will also be able to update their status through an online portal.
IRS officials will separately issue guidance for a paid leave tax credit, which would offset the cost to employers that offer paid sick and family leave because of events stemming from the coronavirus.
The credit would go to employers with fewer than 500 workers. The employers could receive as much as $17,110 for up to 10 days of paid sick leave and as many as 12 weeks of paid family leave.
Under the $1.9 trillion American Rescue Plan, Biden expanded child tax benefits for another year in the midst of the pandemic. Couples earning less than $112,500 can earn each month up to $300 per child 6 and under and $250 per child 6-17
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