Beyond stimulus checks: All the tax breaks parents and retirees should know about



Under the current stimulus proposal, families with children and older adults may be eligible for new tax breaks that could bring in thousands more dollars.

Sarah Tew/CNET

Whether or not you meet the requirements for the third stimulus check for up to $1,400 apiece, you and your family could still benefit in other significant ways if Congress approves the $1.9 trillion relief bill that is now with the Senate. (Here’s the third stimulus check timeline so far.)

The stimulus proposal, called the American Rescue Plan Act of 2021 (PDF), would expand the Child Tax Credit, support affordable early child care, provide money for aging and disability services and raise the maximum earned income tax credit for adults, including older workers. While none of these provisions are guaranteed until signed into law, President Joe Biden is expected to expand child and elder care in a future bill, according to The Washington Post

Here’s everything we know now about what the plan includes to benefit parents, children and older adults, and how your family could see thousands of dollars in tax benefits this year. (We’ve broken out all the ways your family could get more stimulus check money time time around, too.)

How much money could my family receive for my children, in addition to a new stimulus check? 

The American Rescue Plan includes several provisions aimed at lowering child poverty rates in the US, which could bring some families an extra infusion of cash this year. These include:

Stimulus checks for dependents. Under the current bill, dependents of any age (including children, young adults or older adult relatives) will be eligible for up to $1,400 each in stimulus payments. This money won’t come in the form of their “own” check, however, but will instead be added on to the household’s total. 

Expansion of the Child Tax Credit. Parents can usually claim a CTC of up to $2,000 on their taxes for every child under age 17. The American Rescue Plan states that families with children aged 17 and under would receive a credit of $3,000, while those with children under the age of 6 would receive a $3,600 credit. It also makes the credit fully refundable, removing both the dollar cap and earnings limit that currently prevents many low-income families with children from receiving the full credit, according to the Center on Budget and Policy Priorities. (Read more details about the Child Tax Credit changes here.)

Expanded tax credits for child care. To make child care more affordable for families, the plan provides a child-care tax credit for kids under age 13 — a total of up to $4,000 for one child, or $8,000 for two or more children. The credit would be refundable, and available to families making less than $125,000 per year. Those making between $125,000 and $400,000 would receive a partial credit (find out what your adjusted gross income is here). The plan also calls on Congress to provide funding to keep child-care centers open, and improve wages and benefits for child-care workers.

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What types of payments or tax breaks does the plan include for older adults? 

The American Rescue Plan includes funding for programs aimed at helping older adults financially as well. These include: 

Stimulus checks for older adults, including dependents. Under the current bill, older adults (including recipients of SSI or SSDI benefits) would be eligible for a third stimulus check of up to $1,400, if they meet eligibility requirements. This includes older adults who are listed as dependents on someone else’s taxes, though their share of stimulus money would be added to the household’s total amount. (Find out all of the rules around stimulus checks for older adults.)

Expansion of the Earned Income Tax Credit. Designed to benefit people with lower incomes, this tax credit can reduce your taxable income and wages. The relief plan proposes raising this credit for childless adults from about $530 to $1,500, and raising the income limit for the credit from $16,000 to $21,000. It would also expand the eligible age range, eliminating the age cap for older workers. And if your earnings fall in 2021 due to the pandemic, you wouldn’t see your credit reduced. (Find out more about how to claim the Earned Income Tax Credit this year.) 

More funding for aging and disability services. The American Rescue Plan includes additional funds for aging and disability services programs, but doesn’t go into depth about where exactly that money would go. 

For more, find out how a third check could bring your family more money, and when the IRS could send the third stimulus check out


Read More: Beyond stimulus checks: All the tax breaks parents and retirees should know about

2021-02-28 04:00:03

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