According to a report by The Washington Post, President Biden’s $1.9 trillion economic relief package provides approximately $3,000 per child to American families. Under the proposal, the IRS will provide for a credit of $3,600 per child under the age of six and $3,000 per child between the ages six to 17 over a year. The proposal increases the annual income of average Americans to more than $75,000, and for couples with joint income to more than $150,000. This will not only provide immense cash benefits to American families, but also help them cope with IRS problems by giving them enough bandwidth to pay off back debts. In this blog post, we discuss the impact of Biden’s Stimulus proposals on tax credits.
Boosting the Child Tax Credit
The pandemic has driven many people deeper into poverty, which is why many are failing to pay their taxes on time and creating significant tax problems for the future. The President plans to increase the child tax credit to $3,000 for children aged 6-17 and $3,600 for children under the age of six. Currently, American families can claim up to $2,000 per child under age 17. In order to provide benefits to low-income families, Biden plans to make the child tax credit fully refundable by distributing refund checks to the taxpayers, even if the refund credit exceeds the amount they owe to the IRS. To understand more about how you can get tax benefits from child tax credit, you can seek assistance from experienced tax attorneys who can assist you in getting a refund or resolve any IRS issues.
Higher Child and Dependent Care Credit
Currently, the child care tax credit is nonrefundable and goes up to $1,050 per child and $2,100 for two or more kids under age 13. The main aim of President Biden’s proposal is to revamp the credit so that families that pay childcare for kids under age 13 can get a credit of up to $4,000 for one kid or $8,000 for two or more children. This will put more money into the pockets of families. Also, families already making between $125,000 and $400,000 will be eligible to receive a partial credit.
Earned Income Tax Credit Tweaks
Biden also seeks a one-year expansion of the earned income tax credit that is meant for lower income workers. This is the only group of people who are not able to comply with the income tax rules. The President is planning to raise the maximum earned income tax credit for people with no child up to $1,500. Currently, this credit is close to $538 for taxpayers with no qualifying children. He is also planning to raise the income limit for the credit to approximately $21,000 from about $16,000. Finally, he wants to make the credit available to older workers, by eliminating the 65-year age cap. All these steps will significantly improve the financial conditions of taxpayers, enabling them to get significant IRS tax relief and fair solutions to any IRS issues.
According to the Organization for Economic Cooperation and Development, America faces a high level of child poverty because it spends less on child benefits. Through these proposals, President Biden plans to change the tax code for people with low income or are below the poverty line. To know more about the benefits of President Biden’s proposal and how they can impact your IRS issues, or get solutions to IRS problems, connect with the Law Offices of Nick Nemeth’s team of seasoned IRS tax attorneys in Dallas/Fort Worth. Simply call 972-627-4580 or fill out our contact form, and we will take it from there.