Top Tips 2021 – Expanded Child Tax Credits: Relief for Working Families
Article submitted by Community Partnership of the Ozarks
In March, the American Rescue Plan Act of 2021 temporarily expanded two credits that support families with children--the Child Tax Credit and the Child and Dependent Care Tax Credit. Both can help to support families in our community, and we want to ensure every eligible family can receive the full benefit of these expanded credits.
The Child Tax Credit helps families with a wide range of expenses that are necessary with raising children. This tax credit was expanded from $2,000 per child under 16 to up to $3,600 per child under 6 and lowers to $3,000 per child aged 6 to 17. Under the newly expanded Child Tax Credit, all families that earn $75,000 or less for single filers or $150,000 for married filing jointly are eligible. Half of this credit will be received as advance cash payments monthly (up to $360 or $300 a month). The remaining half of the credit will be paid when taxes are filed. Eligible families just started receiving these advance payments in July without having to take any action if they filed tax returns for 2019 or 2020 or received a stimulus check from the IRS. If families didn’t file taxes or receive a stimulus check, they can still sign up for the Child Tax Credit. For more information on the advance payments or to sign up for the Child Tax Credit, visit the IRS website here.
The Child and Dependent Care Tax Credit was also expanded. This tax credit provides support to help working families offset the costs of care for children under 13 or for adult dependents. It was expanded from up to $3,000 per child (maximum of $6,000) to up to $6,000 (maximum up to $12,000). To learn more about the Child and Dependent Care Tax Credit, visit the IRS website here.
These expanded credits along with other components of the American Rescue Plan Act of 2021 have the potential to be life changing for families in need. The Columbia University Center on Poverty and Social Policy found that the impacts from these tax credits, expanded SNAP, direct payments, and expanded unemployment could cut child poverty by more than half. In 2019 the poverty rate in Springfield was 22.9%. This means that there are around 6,870 children in poverty in our community. The American Rescue Plan Act of 2021 could potentially help lift 3,435 children out of poverty in Springfield.
To learn more about how you can help families in need in our community, email info@cpozarks.org.
