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1 1 (September 29, 2021)

handle is hein.crs/goveeoz0001 and id is 1 raw text is: Congressional A Research Service The Child Tax Credit Under the House Ways and Means Committee Build Back Better Reconciliation Language: Specified Child and Presumptive Eligibility September 29, 2021 In September 2021, the House Ways and Means Committee approved reconciliation language that would, among other changes, effectively extend the expanded child credit in effect in 2021 through the end of 2025. Should these changes become law, eligible taxpayers would receive a monthly per-child benefit of up to $300 for young children and up to $250 for older children through the end of 2025. For 2023-2025, the proposal modifies eligibility rules and administration of the credit. (After 2025, there would be no advance payment of the credit under the proposal.) This Insight first provides an overview of how the 2021 child credit is being issued, followed by an overview of how the child credit could be administered under the House proposal. It concludes with some policy considerations with the House approach. Companion Insights summarize the proposed changes and how the benefit would be calculated under the House proposal. The 2021 Child Credit and Monthly Payments While most tax benefits are received once a year as a lump sum after an income tax return is filed, up to half of the 2021 child credit is being issued in six monthly payments between July and December of 2021 as a result of changes made by the American Rescue Plan Act (ARPA; P.L. 117-2). Monthly advance payments of the 2021 child credit are based on an estimate of the credit taxpayers are eligible to claim on their 2021 income tax return. In order to estimate a taxpayer's 2021 child credit, the IRS is generally using 2020 tax data on taxpayers' income, number and age of qualifying children, and marital status. Because the IRS is using older data to issue these monthly payments, this information may not reflect current circumstances in 2021. Income can change, children can move, and couples may divorce or marry from year to year. In some cases, these changes may result in taxpayers receiving more (or less) in advance payments than they are actually eligible for when they file their 2021 return. In cases where a Congressional Research Service https://crsreports.congress.gov IN11766 CRS INSIGHT Prepared for Members and Committees of Congress

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