7 things to know as 1st child tax credit payments go out
NEW YORK (WABC) -- On a special edition of "The Countdown," Bill Ritter and Jennifer Jones Austin talked about the new child tax credit as payments to millions of parents across the country began Thursday.
The payments offer support to struggling families during the pandemic as part of President Joe Biden's $1.9 trillion American Rescue Plan.
The beefed-up credit will provide families with extra funds each month through the end of 2021, along with a tax break next year.
RELATED | First child tax credit payments have been sent: Here's what you need to know
The infusions may offer the greatest benefit to low-income families, cutting child poverty nearly in half -- but the extra cash will also go to better-off American families.
RELATED | Child Tax Credit Update Portal | Internal Revenue Service
Here are 7 things to know about the child tax credit:
1. The child tax credit has been increased from $2,000 to $3,000 for children over 6, and to $3,600 for children under 6. It also expands the ages of children eligible, raising the age limit from 16 to 17.
2. The credit no longer phases in with income, but instead is fully refundable. This means that low-income families and families that don't file taxes - those that make less than the standard deduction of $24,800 - can now receive the full amount of the credit.
3. Most households will not need to do anything to get the increased credit. Families who are eligible should have already received letters from the IRS explaining the changes.
4. How long will the child tax credit last? Monthly payments will be made through December of this year.
5. As for income, the biggest beneficiaries of the changes to the child tax credit will be low-income families and non-filers. For married couples, the increased tax credit starts phasing out at a household income of $150,000.
6. Important to know: each dollar of payment you get now will reduce how much child tax credit you get when you file your taxes. You can opt out of the monthly system on the IRS website.
7. It's a lot of information to take in, but there's a way to calculate your payment. Click here to find out how much could you receive.
Use the calculator below to find out how much you may get as part of the new child tax credit. Your information will not be stored in any way.
Calculator not displaying correctly? Click here to view in a new window.
WATCH | The Countdown: 7 things to know about the child tax credit
The full enhanced credit will be available for heads of households earning $112,500 and joint filers making up to $150,000 a year, after which it begins to phase out.
For many families, the credit then plateaus at $2,000 per child and starts to phase out for single parents earning more than $200,000 or for married couples with incomes above $400,000.
More low-income parents will also become eligible for the child tax credit because the relief package makes it fully refundable. It had been only partially refundable -- leaving more than 26 million children unable to get the full credit because their families' incomes were too low, according to Treasury Department estimates.
Map and table not displaying correctly? Click here to view in a new window.
Click here for more of what parents should know.
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