Child Tax Credit (1 Viewer)

FBG26 said:

I've been reading some info on the proposed child tax credit. The answer to my question below is probably "it depends" and "we don't know until we see the text of a bill", but wondering if anybody has read anything good on this. 

Here's one link, with many others available via internet search. 

Currently the child tax credit is $2000 annually for couples making under $400k (married filing jointly). One current proposal is to up the limit to $3600 / $3000 annually (depending on age), but start phasing out the credit for couples making $150k annually. So my question is, is this effectively a tax increase on families making between $150k to $400k? Am I missing something? That can't be what they are going for, can it? 

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fatguyinalittlecoat said:

I don't know but even just based on your description it's not a tax increase on families making $150K.  Maybe it's an increase on families making some greater amount.

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FBG26 said:

I've been reading some info on the proposed child tax credit. The answer to my question below is probably "it depends" and "we don't know until we see the text of a bill", but wondering if anybody has read anything good on this. 

Here's one link, with many others available via internet search. 

Currently the child tax credit is $2000 annually for couples making under $400k (married filing jointly). One current proposal is to up the limit to $3600 / $3000 annually (depending on age), but start phasing out the credit for couples making $150k annually. So my question is, is this effectively a tax increase on families making between $150k to $400k? Am I missing something? That can't be what they are going for, can it? 

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FBG26 said:

Ok, say the credit now phases out at $200k (or pick a reasonable number), a family making $200k and two kids currently gets a credit for $4k. In this hypothetical, now that same family does not receive any child tax credit. That's a substantial amount of money. I agree with the goal of reducing child poverty by increasing the child tax credit for low income families, but reducing the phase out would also hurt a lot of families that aren't exactly uber wealthy. 

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Part 2 – Child Tax Credit

Sec. 9611 – Child Tax Credit improvements for 2021

Makes the child tax credit (“CTC”) fully refundable for 2021 and increases the amount to $3,000 per child ($3,600 for a child under age 6). The provision also increases the age of qualifying children by one year for 2021, such that 17-year-olds qualify for the credit. For 2021, the excess of the child tax credit (i.e., the additional $1,000 or $1,600 per-child in excess of the present-law $2,000 per-child credit) is reduced by $50 for every $1000 in modified adjusted gross income in excess of $150,000 for joint filers ($112,500 for head of household filers and $75,000 for other filers). Once the excess credit amount is so reduced, the credit plateaus at $2,000, and then phases out at the present law levels established in the TCJA ($400,000 for joint filers, $200,00 for other filers).

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FBG26 said:

Looks like I may have found an answer. It's undated, but I think this is the current proposal: Summary of the proposal from House Committee on Ways and Means.

So it's the excess credit that phases out starting at $150k, but the base $2k wouldn't begin to phase out until $400k like it currently does. Good to know. 

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dgreen said:

I'll then need to my more withheld from each paycheck so that I don't owe next year.

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