How much will you be entitled to receive?
With millions in need of coronavirus resources, President Joe Biden has outlined an ambitious plan to help Americans deal with the financial impact of COVID-19. Congress has since moved quickly to turn its proposal into legislation, and a bill will soon make its way to the president’s desk for signature.
For parents, the coronavirus stimulus bill will provide generous financial assistance. In fact, some families are entitled to up to $5,000 per child under the law. Here’s how the calculations work on this payment.
Stimulus checks and an expanded tax credit could add up to $5,000 per child
The $5,000 payment per child could come from two different provisions contained in the COVID-19 legislation:
- $1,400 stimulus checks: These are available for adults, as well as eligible dependents. Anyone declared as a dependent may be eligible, including students and other adult dependents.
- An expanded child tax credit of up to $3,600. Parents of children under six could be eligible for a tax credit of $3,600. Those with older children may qualify for a $3,000 tax credit.
The $1,400 stimulus checks are available in full to single filers with incomes up to $75,000 and married joint filers with incomes up to $150,000. Payments completely disappear once income reaches $80,000 for singles and $160,000 for married joint filers.
The expanded Child Tax Credit would also be available in full with income up to $75,000 for singles and $150,000 for married joint filers, with eligibility being phased out for high earners.
The child tax credit is actually an expansion of an existing tax credit that is in place. This tax credit currently provides $2,000 per eligible child, but only $1,400 is refundable. And only people who earned at least $2,500 could qualify in the past, but the expanded credit allowed by the COVID relief bill now eliminates that minimum income qualifier.
The upper income limits for the existing credit are $200,000 for single filers and $400,000 for married joint filers. These will remain in place for the existing credit, allowing high-income earners to claim the $2,000 they are currently entitled to even if they will not qualify for the new, higher credit amount.
When will parents receive their money?
Stimulus checks of $1,400 will soon begin to be deposited into Americans’ bank accounts. Once Biden signs the legislation, many people could start receiving their checks as early as this month.
Traditionally, parents had to wait to claim the child tax credit until they filed their tax returns. However, the COVID relief bill aims to change that and have the IRS begin distributing the payments from July 2021 to December 2021. Half of the payments would be made through these periodic payments, with parents able to claim the other half on their tax return.
This could mean that under this bill, eligible parents will receive a whopping $5,000 per eligible child from the government, with most of the money paid out by the end of 2021. a huge difference in the budgets of many families.
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