Here’s the good news about the Democrats’ $ 1.75 trillion compromise spending plan, the outline of which was released on Thursday. The latest update to the child tax credit we have is that the spending bill framework includes an expanded version of the credit for one more year. This means that in addition to the monthly stimulus checks next year, families would also get the second half of their 2021 child tax credit at tax time – when they file their federal income tax return.
Plans could still change, of course. The adoption of the expenditure bill in its present form is not guaranteed. And to win a sufficient number of Democrats in the House – not to mention the 50 in the Senate, plus the decisive vote of Vice President Kamala Harris – parts of the bill could be scrapped. Or change considerably.
Update of the child tax credit
For now, let’s stop and consider where we are at, and then take a look at what this update means.
In just over two weeks, the fifth of the six child tax credits in the currently approved payment package will be released. The check scheduled for November 15 is the penultimate payment, with the sixth and last check currently set for December 15. Including the child tax credit check that was issued earlier this month, the IRS and the U.S. Treasury have sent $ 60 billion to more than 36 million households so far.
The six checks that beneficiary families receive this year represent half of their annual payment. The other half takes the form of a tax credit in 2022. Families get that second half when they file their taxes next year.
2021 expense invoice
President Biden had wanted to permanently extend this tax credit, if not at least to cement a multi-year extension. Stop and think for a moment what this means. Millions of American families would get a check for several hundred dollars from the federal government every month, in a huge expansion of the social safety net.
For now, however, what appears to be taking shape is a one-year extension of that benefit. A benefit, by the way, that has already transferred tens of billions of dollars from federal government coffers to American families.
As a reminder, the $ 1.9 trillion stimulus bill earlier this year increased the child tax credit from $ 2,000 to $ 3,000 for each child in a household aged six to 17. For each child under six, the credit is $ 3,600. The credit goes entirely to married couples with an adjusted gross income of up to $ 150,000. And single-parent families with incomes under $ 112,500 will also get the full credit.
Next year, however, what if things stay on their current course? There is actually a scenario where some families could receive $ 7,200. For a variety of reasons, some families have yet to start receiving their child tax credit payments for this year. Maybe they haven’t taken some of the steps required by the IRS, such as making sure bank and / or postal details are up to date.
Whatever the reason, it sets up a potentially interesting scenario next year. One in which these families will essentially receive a double dose of the child tax credit in 2022. Again, as long as none of the current details change.