Biden extends USA’s Child Tax Credit programme

American President Joe Biden called on Congress to extend “Child Tax Credit Programme” because this programme has potential to reduce child poverty in America.

Key Points

• Programme will be extended beyond its December expiration date.
• This announcement was made on the day, Internal Revenue Service started distributing payments, which are part of American Rescue Plan
• American President initially plans to extend this credit for four years with the objective of making it permanent.
• Making the Child Tax Credit Programme permanent was one among five main aspects of budget agreement.
• According to IRS estimates, $15 billion will be distributed to about 39 million families & 65 million children.
• Eligible families can expand credit for 2021, adding $1,000 to existing $2,000 Child Tax Credit for each child between age of 6 years to 17 years and $1,600 for child aged 5 and below.

Child Tax Credit (CTC)

CTC is a tax credit provided to parents with dependent children in several countries. Credit is given on the basis of number of dependent children a taxpayer has and his/her income level. In United States, families earning less than $400,000 per year can claim full CTC while in United Kingdom, tax credit is given to families earning less than £42,000. In United States, tax credit is “non-wastable” and paid irrespective of family’s net tax liability. Higher rates are provided for disabled children. CTC has been integrated with working tax credit that also provides support for childcare costs.

Month: Current Affairs - July, 2021