the is US federal government And 12 different countries offer Child tax credits To help families with children feel more financially secure.
Their scheme is believed to help nearly two million children escape poverty each year, with the number of dependent children, marital status and income level being the main factors affecting the amount of the tax credit.
When did child tax credits start?
The federal child tax credit has historically enjoyed bipartisan support. It was established as part of the Taxpayer Relief Act of 1997.
Initially, the tax credit was $400 per child under the age of 17 and was non-refundable for the majority of families.
After the Tax Cuts and Jobs Act of 2017, it was raised to $2,000, as the US government set a $1,400 cap on the amount that could be refunded per child. In addition, it introduced phase-out rates and criteria for high-income taxpayers.
Will child tax credits be extended through 2025?
The child tax credit was temporarily increased under the American Rescue Plan of 2021 (ARPA) for the 2021 tax year, from $2,000 to $3,600 for each child under the age of six and $3,000 for each child through the age of 17.
For single applicants earning more than $75,000 per year and married couples earning more than $150,000 per year, the size of the enhanced benefit has gradually decreased.
For the first six months, instead of paying the entire tax credit at once, ARPA made the amount temporarily fully refundable and distributed half of it as monthly payments.
According to the government’s official website, more than 61 million children in more than 36 million households may have benefited from the enhanced child tax credit, with the majority of the money going toward child care, food, housing and other necessities.
However, this was a temporary measure and child tax credit prepayments were stopped once the coronavirus pandemic began to subside.
It should be noted that the individual tax and estate tax provisions of the Tax Cuts and Jobs Act will expire in 2025.
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