We all pay taxes, which often helps families get ahead each year with a bit of extra money. There are so many different tax credits out there and so many tax credits that have been changed or altered since 2020 and the COVID-19 pandemic that we all lived through. Taking the time to figure out these credits, to look at how they might help us out, and to see how they truly affect families is a must.
What Was the 2021 Child Tax Credit?
During the pandemic, the federal government under the Biden/Harris administration worked to help expand and increase the child tax credit to help families with children. The tax credit for children the age of five or under was going to be counted for a $3,600 credit for each child, while those that were ages 6 to 17 were counted for $3,000.
The increase came from the previous tax credit where children were only counted for a $2,000 credit per child no matter their age under the age of 18. This increase was meant to help decrease the tax burden or responsibility for each family that had children to help offset some of the costs that came with the pandemic and with parents who were not able to work and make as much money as they were previously able to make.
This tax credit helped to take the overall tax requirement for families with children and greatly reduce it so that they could take that money from the credit and then use it for other things like keeping their family afloat during the difficult times of the pandemic. The tax credit at that rate only lasted for the tax year 2021 and the year 2022.
For the year 2023, the tax credit was $2,000 per child as long as they are under the age of 18 with the refundable amount being $1,600. These increased credits for years following 2022 were stated to be to help reflect upon the increase in the cost of living after the pandemic as many things are not back to pre-pandemic levels yet.
How Can the 2021 Tax Credit Help You Today?
The tax credit and the program that went with it was called the American Rescue Plan
Act was put in place to help families that were struggling with the pandemic and struggling with the overall landscape that we were all dealing with during that time. Though tax credits have gone back down since 2021 and 2022, the lasting effects of the credit can still be seen.
For those who received this larger credit, the extra money each month did help many to make it through the pandemic and through being laid off or being confined to their homes where they could not work. It kept millions of people afloat during some very dark times and some very difficult times that many would not have made it through without it.
It also helped the economy as more and more people were able to keep buying things and able to keep going out to shop for both things that they wanted and necessities without having to worry about not having the money. For those who have not filed their taxes for the years 2021 and 2022, the tax credit for those years still stands.
That means that if you were entitled to a tax refund during those years, you can still go back and file retroactively and get that tax rate for those years. This means you may be able to get a larger refund for those years than you would for this year if you are counting your children on your taxes.
What is the Current Child Tax Credit?
Currently, there are talks of increasing the child tax credit for parents again for the year 2024 and then into 2025. The proposed new tax rate is $1,900 for each child under the age of 18 with the maximum refundable amount being $1,800.
The next increase would come in 2025 with the credit going to $2,000 and the maximum refundable amount being $1,900. Now, this would mean that those with children and with a lower income would be able to lessen their tax burden and get a larger refund. This does not mean that every family with children is going to be eligible for a full refund or the full maximum amount.
For families with a larger tax burden, you are not going to be able to get the full maximum refund amount. This does not mean that you are not going to be able to count the full amount, but that you are not likely to get the full maximum refund.
So, what does this mean? This means that lower-income families with a lower tax burden are going to be able to get more money back each year with their kids. Some might see this as a great thing. It does help to stimulate the economy, it helps to keep those lower-income families afloat, and it does help to give them more money to be able to spend that they may not be earning.
Some see this as unfair as those with a higher tax burden are not getting the same amount of money back as those families that are not making as much money. No matter what the case is, this is a tax credit that will always be around, and that change is going to help those who have children sort of offset their costs and get a bit ahead each year.
The new tax rates have not been approved, but it is said that if they are extra checks will be sent out to families that qualify automatically without their having to do anything. The tax credits are changing, and staying on top of them can help you better understand what is happening and ensure your taxes are correct.
We all pay taxes, which often helps families get ahead each year with a bit of extra money. There are so many different tax credits out there and so many tax credits that have been changed or altered since 2020 and the COVID-19 pandemic that we all lived through. Taking the time to figure out these credits, to look at how they might help us out, and to see how they truly affect families is a must.
What Was the 2021 Child Tax Credit?
During the pandemic, the federal government under the Biden/Harris administration worked to help expand and increase the child tax credit to help families with children. The tax credit for children the age of five or under was going to be counted for a $3,600 credit for each child, while those that were ages 6 to 17 were counted for $3,000.
The increase came from the previous tax credit where children were only counted for a $2,000 credit per child no matter their age under the age of 18. This increase was meant to help decrease the tax burden or responsibility for each family that had children to help offset some of the costs that came with the pandemic and with parents who were not able to work and make as much money as they were previously able to make.
This tax credit helped to take the overall tax requirement for families with children and greatly reduce it so that they could take that money from the credit and then use it for other things like keeping their family afloat during the difficult times of the pandemic. The tax credit at that rate only lasted for the tax year 2021 and the year 2022.
For the year 2023, the tax credit was $2,000 per child as long as they are under the age of 18 with the refundable amount being $1,600. These increased credits for years following 2022 were stated to be to help reflect upon the increase in the cost of living after the pandemic as many things are not back to pre-pandemic levels yet.
How Can the 2021 Tax Credit Help You Today?
The tax credit and the program that went with it was called the American Rescue Plan
Act was put in place to help families that were struggling with the pandemic and struggling with the overall landscape that we were all dealing with during that time. Though tax credits have gone back down since 2021 and 2022, the lasting effects of the credit can still be seen.
For those who received this larger credit, the extra money each month did help many to make it through the pandemic and through being laid off or being confined to their homes where they could not work. It kept millions of people afloat during some very dark times and some very difficult times that many would not have made it through without it.
It also helped the economy as more and more people were able to keep buying things and able to keep going out to shop for both things that they wanted and necessities without having to worry about not having the money. For those who have not filed their taxes for the years 2021 and 2022, the tax credit for those years still stands.
That means that if you were entitled to a tax refund during those years, you can still go back and file retroactively and get that tax rate for those years. This means you may be able to get a larger refund for those years than you would for this year if you are counting your children on your taxes.
What is the Current Child Tax Credit?
Currently, there are talks of increasing the child tax credit for parents again for the year 2024 and then into 2025. The proposed new tax rate is $1,900 for each child under the age of 18 with the maximum refundable amount being $1,800.
The next increase would come in 2025 with the credit going to $2,000 and the maximum refundable amount being $1,900. Now, this would mean that those with children and with a lower income would be able to lessen their tax burden and get a larger refund. This does not mean that every family with children is going to be eligible for a full refund or the full maximum amount.
For families with a larger tax burden, you are not going to be able to get the full maximum refund amount. This does not mean that you are not going to be able to count the full amount, but that you are not likely to get the full maximum refund.
So, what does this mean? This means that lower-income families with a lower tax burden are going to be able to get more money back each year with their kids. Some might see this as a great thing. It does help to stimulate the economy, it helps to keep those lower-income families afloat, and it does help to give them more money to be able to spend that they may not be earning.
Some see this as unfair as those with a higher tax burden are not getting the same amount of money back as those families that are not making as much money. No matter what the case is, this is a tax credit that will always be around, and that change is going to help those who have children sort of offset their costs and get a bit ahead each year.
The new tax rates have not been approved, but it is said that if they are extra checks will be sent out to families that qualify automatically without their having to do anything. The tax credits are changing, and staying on top of them can help you better understand what is happening and ensure your taxes are correct.
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