With the passage of the American Rescue Plan Act (ARPA) came a bonus to the child tax credit, a welcome relief for many families during the pandemic. The Act makes the credit fully refundable for the 2021 tax year and increases the credit up to a maximum of $3,600 per child six or younger or $3,000 for older children, including 17 year-olds. According to Robert Lickwar, a Partner in UHY's Northeast region, "That will be (based on) the age of the child at the end of the year."
The IRS is instructed to send advance payments to eligible families and should begin distributing these payments on or before July 1, 2021. "The IRS really needs to be commended," Lickwar says, noting the agency has had to react quickly to a number of significant tax changes in the past year.
While the temporary boost to the child tax credit is anticipated to return to the usual $2,000 next year, Lickwar said, "There has been a lot of discussion already that a credit like this should be made permanent."
Read the full article published by U.S. News & World Report.