For most Americans, the most noticeable part of the American Rescue Plan Act was the $1,400 stimulus checks authorized by the law. These were available to adults as well as dependents, and most people already received their payments long ago.
But there is still some stimulus money coming because of coronavirus relief legislation. And, in fact, a report from the Congressional Research Service shows that one particular program created by the American Rescue Plan Act will lead to the average American family receiving a whopping $5,086 in relief this year.
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This coronavirus relief program provides valuable financial help for families
According to the Congressional Research Service, one of the most valuable and important stimulus programs created by the American Rescue Plan Act was the expansion of the Child Tax Credit.
The ARPA changed the existing rules for this credit, increasing the amount of it substantially. While the credit was originally valued at $2,000 per child through age 16 prior to 2021, only $1,400 of it was refundable. So those who had less than a $2,000 tax bill wouldn’t receive the full amount. The credit was increased to $3,600 for children under age 6 and $3,000 for children aged 6-17, and was made fully refundable by the American Rescue Plan Act. These changes apply in 2021 only, unless lawmakers take further action.
The Congressional Research Service released a report in July of 2021 showing just how substantial a financial impact this will have for households across the country. Specifically, it found that the average American family would receive a $5,086 credit this year. However, lower earning families would get even more, with households who have an income below 100% of the poverty level on track to receive $5,421.
Now, families would have received some money under the old rules. But it would have been far less. Before the coronavirus relief legislation modified the credit, the average family would have been entitled to just $2,597. This means the typical family should get $2,489 more in their bank accounts this year thanks to the COVID-19 relief bill.
And lower earners, many of whom weren’t previously eligible for the full credit amount, will see even more of an increase in their take-home income due to the expanded credit. That’s because, under the old rules, the average family would have received a credit worth just $976 if they had an income under 100% of the poverty level.
Some of this stimulus money has already been delivered, with payments of $250 or $300 deposited into bank accounts or sent via mail in both July and August. These monthly payments will continue through December of 2021. Parents will need to claim the rest of the money when filing their 2021 tax return, so the average family who gets their $5,086 will receive half the funds this year and the other half next year after their return is submitted.
Families should make sure the IRS has their information on file so they can receive their monthly payments, and should be certain to file tax returns in 2022 to get the remainder of their funds.
View more information: https://www.fool.com/the-ascent/personal-finance/articles/stimulus-update-average-families-to-receive-5086-in-2021-and-2022-from-this-coronavirus-relief-program/