The Child Tax Credit was recently expanded by the American Recovery Act, which was enacted in March of 2021. Part of the expansion is to extend the 2021 child tax credit to more families by sending them regular direct payments throughout 2021 instead of having them wait until they file their full 2021 taxes in 2021. This means that families will not need to pay taxes on the additional amount. For a detailed article about changes, you can read this child tax credit changes post. A few other changes to the Child Tax Credit also took effect with the additional extension:
The first change is the amount of the tax-free lump sum that can be sent to qualifying parents each year. Previously, only the dependents of a U.S. citizen could claim the maximum amount of the child tax credit using the Child Tax Credit. Now, any non-custodial parent can file for the maximum credit using the Child Tax Credit. In addition, this includes non-resident parents and those who do not claim the child tax credit using the Social Security number of a dependent child. Also, in regards to the dependent children, the Social Security number of the parents or someone acting on behalf of the parents must be given when filing. This has always been the case.
Another change with the child tax credit changes is the number of qualifying children that can be claimed under the child tax credit. Previously, there was only one child that could be claimed under the child tax credit provisions. Now, two children can be claimed under the provisions. If you are claiming two children, you must add the two children together.
Both of these changes were implemented as a means of raising the maximum amount that can be included in the child tax credit. There was also a revision to the medical expense section of the plan. Previously, it stated that the maximum medical expenses could be claimed only if the child is under the age of 18. Now, the new provision states that any medical expenses incurred by a child while he/she is enrolled in any public or private school will be eligible for inclusion in the plan. However, the medical expenses incurred before the child reaches the age of six will not be considered.
The amount for the medical expenses that can be claimed in the future will also be decided by the government and this is why the details have been changed. Earlier, the limit was $2,500. Now, the limit could be increased up to a maximum of $3,000 per child for qualifying children ages 6 and below. This is done to ensure that the maximum benefit is still granted and not just the limit.
Another change that has been made in the American rescue plan is the increase in the amount of money that can be claimed. Previously, the American citizen had to spend at least two thousand dollars to be eligible for the benefit. Now, this amount has been upped to three thousand dollars. This is done to make the American citizens eligible for claiming the maximum benefit in the maximum period of time.
For parents, one of the most important changes that have been implemented in the American rescue plan is the change that has been made in the child tax credit changes. Previously, if a parent claimed the maximum benefits before the implementation of the plan then he or she had to claim the same for all four children. However, after the American rescue plan was introduced, the parents are not required to claim for the same for all four children. They are allowed to claim only the maximum three kids for each year. In addition to this, the parents are also allowed to claim the maximum benefits before the credit is increased to three thousand dollars in each of the four years. The American citizens were always benefited with the original child tax credit changes. The new amendments to the credit provide a lot of help to these people to earn money. This means that the new credit will ensure that these people do not have to spend money so as to make ends meet. In addition to this, the new tax credits are fully refundable and therefore, there is no reason for these people to worry about the money. In addition to this, the entire credit is fully taxable and in other words, eligible families can get it if they owe no federal income tax. Apart from this, the new tax credits are more beneficial for the average citizen and the unemployed can also apply.