How would these stimulus checks work?
House Democrats are building the payments into President Joe Biden’s $1.9 trillion COVID relief package now before Congress.
Biden originally proposed enhancing the current child credit to make sure families receive at least $3,000 for each child under the age of 17 — $3,600 for kids under age 6 — for a year. The lawmakers want the IRS to send monthly checks from July to December that would account for half the expanded credit.
Parents would receive $250 per child ($300 for kids under 6) every month for six months. The other half of the credit would then be refundable next year, on parents’ 2021 tax returns. On Thursday, the plan was passed by the tax-writing House Ways and Means Committee.
As with the other stimulus checks, the child credit cash would likely help cover essential needs, like food and rent, which the U.S. Bureau of Labor Statistics said were the main ways the very first direct relief payments were spent last spring.
Others used their money for investing, according to a bureau survey, or for other unspecified things — possibly to buy affordable life insurance, because policies have seen a huge increase in demand throughout the pandemic.
Who qualifies for the new checks?
The current child tax credit is worth $2,000 per child under the age of 17. For lower-income households, up to $1,400 of the credit is refundable, but you must earn an income of at least $2,500 to get the refund.
The House version of Biden's COVID rescue bill not only increases the amount families would receive by up to $1,600 per child, but would make the entire credit fully refundable — and include 17-year-olds.
Note that the new credit would have targeted income limits, aiming to help the neediest families. It would begin to phase out for individuals with adjusted gross incomes of $75,000, head-of-household filers earning $112,500, and couples filing jointly who make $150,000.
The IRS would base eligibility on the most recent tax return in its system, which would be the 2019 return for taxpayers who delay getting their 2020 taxes in.
To ensure they qualify for the credit, families who saw a drop in income last year may want to fire up their tax-filing software and get their return in soon.
What if your family needs more money right now?
If your family may not qualify for the enhanced credit or you can’t wait until July for the extra aid money, here are ways to find some cash right away:
Become your own insurance adjustor. Don’t like what you’re paying for insurance? Adjust your way into freeing up cash in your monthly budget. With everyone staying home during the pandemic and driving way less, some car insurance companies have been giving customers price breaks. Not yours? Cut them loose and shop around for a better policy. Plus, did you know you could save hundreds on homeowners insurance by comparing rates on that coverage?
Say goodbye to high-cost debt. How much of your monthly credit card payments go toward interest? If you’ve been relying on credit cards throughout the pandemic, you’ve probably been accruing very expensive interest. A lower-interest debt consolidation loan can gather up your balances into a single, lower-interest payment — helping you find freedom from your debt sooner.
Find savings to "make your own" stimulus check. Budget-friendly can still be fun. Dump streaming services and any other monthly subscriptions you're not using. Or maybe you have a hobby or special skill you can turn into a side hustle, to bring in extra income. And, when you do have to make purchases, save yourself some time hunting down the best prices and coupons online — just download a free browser add-on that will do all that automatically.
Refinance your mortgage and slash your payments. Even if you’ve had your home for only a year, taking advantage of low mortgage rates to refinance your mortgage could save you thousands of dollars over the next year. Mortgage tech and data provider Black Knight says 16.7 million U.S. homeowners have the potential to cut their housing payments by an average $303 per month through a refi.