HUNTINGTON, WV (WOWK) – As a part of the 2021 American Rescue Plan Act, some Americans can expect to receive up to $8,000 in a child tax credit.
The $8,000 is an increase from the credit many households saw in 2020. Before, qualifying residents could expect $300 per month for each dependent under the age of six for a total of $1,800 and expect $250 per month for each dependent between the ages of 6 and17, totaling up to $1,500.
However, now, due to the current economic condition, that’s increased. But tax officials say the increase comes with restrictions as well.
How is there an increase?
“What the legislature did with the American Rescue Plan Act of 2021, it increased the percentage of every dollar that you spend per dependent from 35% to 50% of every dollar and also increased the amount of money that you can spend that would be eligible for the credit. So for 2020, the max amount for a family with two kids could take 35% of up to $6,000 in “care credit.” So the maximum amount available to them (for 2020) would have been $2,100 in credit. For 2021, where they’ve increased it to 50%, the maximum amount you’re able to have in credit of a family with two kids or more is $8,000,” says Renick Perry with Renick Perry CPAs PLLC.
Perry says along with those restrictions, there are also requirements Americans must meet to be eligible to receive these additional funds.
Do I qualify?
“If you have a married, filing joint, couple, those spouses have to work or there is the caveat that you could be out looking for work as well. In addition to that, you also have to have earned income. You have to be working or looking for work and have to pay a child care provider whatever amount of money to watch your children or dependents.”
These changes are currently only for 2021, and it has not yet been determined if they will carry over into 2022.
Perry says if you have any other questions, he recommends speaking with your tax advisor or visiting the IRS’s website