JACKSONVILLE, Fla. — In just under two months, millions of parents are set to get more financial help under the American Rescue Plan.
Today the U.S. Treasury Department and the IRS announced families will begin receiving money in July from what is known as a child tax credit.
Some parents are not quite clear about what makes this federal tax credit different. Action News Jax’s Courtney Cole breaks down what you need to know.
Fist thing’s first: a federal child tax credit already exists and has for years. The Biden Administration expanded it.
Under this expansion, families will begin receiving child tax credit payments on July 15.
“But basically what this is, is a nonrefundable tax, which helps to lessen your tax liability,” said Zanthia Butler. Butler is a tax professional with Jackson Hewitt.
Butler explained that the money parents are getting is a portion of what they would have generally received as a tax refund after filing their taxes. They will get the rest when they file tax returns next year.
“It’s nice to have the money readily available than just having a lump sum. Sometimes, you know, things pop up. Um, sometimes we just can’t wait till then,” the mother mentioned to Cole.
“Remember we’re always filing a year behind. So if your income was $10,000 in 2020, but it goes up to $20,000, in 2021, there is going to be a difference in what you’re eligible for,” Butler explained.
Cole spoke to a mom, who wasn’t comfortable talking on-camera, but said as a single parent, she is grateful for all the help she can get.
“Definitely want the help, especially, you know, the whole pandemic that happened.”
Your eligibility is based on your 2020 tax return if it’s already processed and filed or your 2019 tax return.
According to a release from the White House, the maximum child tax credit in 2021 has been increased to up to $3,600 for children under the age of 6 and up to $3,000 for each child between 6 and 17 years old.
Eligible families, with a child younger than 6, will get a payment of up to $300 each month. If the child is 6-17 years old, they can receive up to $250 each month.
“I’m just very happy you made it aware to me, to be honest,” the mother said to Action News Jax.
Heather Bouchey, a member of the White House Council of Economic Advisers, told Cole more than 3 million children in Florida will benefit from this new tax credit.
“What we know from other countries and from the experience in the United States is that this is a really important, much needed benefit for families,” said Bouchey.
She went on to clarify that even if you don’t owe taxes you still get the child tax credit, making it fully refundable.
“Make sure that you’re in touch with the IRS to let them know that you have kids and that you are eligible for this, it’s an important piece of the puzzle,” Bouchey said.
Some Republicans are not on board with the Biden Administration’s child tax credit.
Florida Sen. Marco Rubio released a statement saying in part:
“We do not support turning the Child Tax Credit into what has been called a ‘child allowance,’ paid out as a universal basic income to all parents. That is not tax relief for working parents; it is welfare assistance.”
Butler also said parents can opt if they’d like to just wait and receive the whole amount the next time they file their taxes.
This expanded tax credit is only temporary.
President Biden would like to extend it through 2025, but that will depend on whether Congress passes the American Families Plan.
To read more on the child tax credit from the IRS, click here.
Cox Media Group