In March, the American Rescue Plan authorized the child tax credit to help families raising children. The monthly payments began in July, appearing as a deposit from the IRS TREAS on the 15th of every month, and recipients will receive a lump sum in 2022.
In total, recipients may receive $3,600 for each child 5 years old and younger and $3,000 for each child six years old and older. But once the child turns 18, the IRS stops sending the payments. Also, if the child claimed on your taxes no longer lives in the same home, visit the IRS website to update your family information to avoid overpayment. Receiving an overpayment could mean you have to return the money when you file your taxes next spring.
Biden administration's "Build Back Better" agenda plans to extend the child tax credit through 2022. The proposed budget decreased from $3.5 trillion to $1.85 trillion. This reduction caused the plan to cut popular proposals like two free years of community college, prescription drug prices, paid family and medical leave, and a tax on billionaires.
However, the framework would continue to help families through universal pre-K, focus on climate change and extend the child tax credit. Within President Joe Biden's new framework, the child tax credit would expire at the end of 2022, but it could be weeks before legislation is ready to vote.
In this episode of "Clarified," learn about the child tax credit and how it helps American families.